LHDN Stamp Duty Requirements for Business and Employment Documents in Malaysia

In Malaysia, signing a document does not automatically make it legally complete. Certain business and employment documents must be stamped by LHDN before they are considered fully valid under the law.

For HR teams and employers, understanding which documents require stamp duty, when stamping must be done, and what happens if it is missed is essential. Failure to comply can result in penalties, delayed enforcement of contracts, or documents being rejected in court.

What Is LHDN Stamp Duty?

Stamp duty is a statutory tax imposed under the Stamp Act on specific legal documents, known as instruments chargeable with duty.

Stamping confirms that the required stamp duty has been paid and allows the document to be legally recognised. A stamped document can be enforced and used as evidence in court, while an unstamped one may not be admissible.

How does it work in practice? Employers submit eligible documents to LHDN, either physically or via e-Stamping (where available). Stamp duty is paid based on either:

A fixed amount, or
A value-based calculation, depending on the document type.

Which Business & Employment Documents Must Be Stamped

Not all HR or business documents require stamp duty. The key factor is whether the document creates legally enforceable obligations between parties.

A. Employment Contracts

Employment contracts are among the most common documents that require stamping. Generally, written employment contracts that clearly outline enforceable terms, such as salary, duties, benefits, and duration, are subject to this requirement.

This applies to various types of contracts:

Permanent employment contracts
Fixed-term contracts
Part-time employment contracts

However, it is important to note that simple offer letters, which do not create binding contractual terms, may not always incur stamping fees. Therefore, HR should carefully review the content of these letters.

B. Service Agreements & Consultancy Contracts

Contracts with non-employees also fall within stamp duty scope. Agreements with consultants, freelancers, or independent contractors usually require stamp duty if they establish binding obligations. HR and procurement teams should not assume that “non-employment” contracts are exempt.

C. Shareholders’ Agreements & Partnership Deeds

These documents commonly require stamping because they define ownership and responsibilities, including:

Shareholders’ agreements
Partnership deeds
Agreements that regulate rights, profit sharing, or management control

D. Memorandum & Articles of Association

Company constitutional documents are also subject to stamp duty.

At incorporation

Memorandum and Articles of Association are typically stamped during company registration.

After incorporation

Amendments may or may not attract stamp duty, depending on the nature of the change.

E. Lease Agreements / Tenancy Contracts

Lease-related documents almost always require stamp duty. It applies to office leases, retail premises, and other rental agreements.

Stamp duty is calculated based on:

Rental value
Duration of the lease

Longer lease periods usually attract higher stamp duty.

F. Loan / Financing Agreements

Financing documents are commonly subject to stamp duty.

Loan agreements
Promissory notes
Financing instruments

Stamp duty is generally calculated based on the loan amount.

G. Other Legal Instruments

Additional documents that often require stamping include:

Powers of attorney
Guarantees
Bills of exchange
Negotiable instruments

HR may encounter these less frequently, but they are still relevant in certain business contexts.

How to Stamp a Document with LHDN

Stamping follows a clear process that HR and admin teams should be familiar with.

Identify whether the document is chargeable with duty

Review whether the document creates enforceable legal obligations.

Submit the document to LHDN

This can be done via:

Physical submission at an LHDN office, or
e-Stamping, if the document type is eligible.

Complete the relevant stamping form

Ensure details match the signed document exactly.

Pay the applicable stamp duty

Payment is based on fixed or value-based rates.

Obtain proof of stamping

Keep the stamped document and receipt in the contract file.

Important note: Documents executed in Malaysia must generally be stamped within 30 days after signing. Late stamping may trigger penalties.

How Stamp Duty Is Calculated

Stamp duty is not calculated the same way for all documents.

Fixed Duty

Some documents, such as employment contracts, usually attract a nominal fixed stamp duty.

Value-based Duty

Other documents, such as lease agreements or loan contracts, are calculated based on:

Rental value and duration, or
Loan amount

Stamp duty rates may change over time, so employers should always refer to the latest LHDN stamp duty schedule.

Penalties for Non-Compliance

Failing to comply with stamp duty requirements can have serious consequences.

Late Stamping Penalties

Late submission may result in higher duty or additional penalties.

Unstamped Documents

Documents that are not stamped may not be admissible in court.

Audit Exposure

Non-compliance discovered during an LHDN audit may attract further penalties.

Practical Tips for HR & Employers

Good internal practices can prevent stamping issues.

Maintain a central register of all stamped contracts and documents.
Review documents before signing to determine stamping requirements.
Use LHDN’s e-Stamping facility where available, noting that not all documents are eligible.
Train HR and admin staff to recognise documents that require stamp duty.
Keep stamped copies and official receipts together with employee or contract records.

FAQs

What is LHDN stamping?

It is the payment of stamp duty to LHDN to validate certain legal documents.

Which employment documents must be stamped?

Employment contracts with enforceable terms generally require stamping.

When must a document be stamped after signing?

Usually within 30 days after execution in Malaysia.

Can stamp duty be paid online?

Yes, through LHDN’s e-Stamping system, if the document type is eligible.

Where can employers pay stamp duty?

At LHDN offices or via e-Stamping, depending on the document.

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