The Stamp Duty Audit Framework 2025 (“Audit Framework”) introduced by the Inland Revenue Board of Malaysia (“IRB”) effective 1 January 2025, reinforces voluntary compliance under the Stamp Act 1949 (“Stamp Act”) with IRB ramping up on audits to ensure compliance.
Under the Audit Framework, the IRB may conduct two types of stamp duty audits:
- General Review
Conducted when an audited party submits document(s) to IRB for online stamping. An audited party may be required to attend an interview at IRB’s office if additional information is required which may escalate into a comprehensive review;
- Comprehensive Review
Involves examining all executed documents in an audited party’s possession. It may be conducted either at the audited party’s premises, IRB’s offices, or at any location mutually agreed between IRB and the audited party.
Note that the IRB may audit documents signed up to the last three (3) calendar years but this time limit does not apply to cases involving fraud, evasion of duty or negligence under sections 63, 64 and 74 respectively of the Stamp Act.
What happens if I don’t stamp my documents?
Late stamping
Under the Stamp Act, all written instruments listed in the First Schedule of the Stamp Act must be stamped within thirty (30) days from the date of the instrument (subject to exemptions below) failing which the following penalties shall apply:
| Time frame | Penalties (Section 47A) |
| Within 3 months | RM50 or 10% of the amount of the deficient duty, whichever is higher; or |
| After 3 months | RM100 or 20% of the amount of the deficient duty, whichever is higher. |
At present, the IRB has announced the following concessions specifically for employment contracts in their media statement on 6 June 2025:
| Dated before 2025 | Exempted from stamp duty and late stamping penalties. |
| Dated from 1 January 2025 | Exempted from late stamping penalties provided employment contracts are stamped by 31 December 2025. |
| Dated from 1 January 2026 onwards | Standard practice applies. Employment contracts to be stamped within 30 days from date of the contract or late stamping penalties will apply. |
Notwithstanding, do note that we have yet to see the relevant exemption order for the concessions. We will update this write-up once the relevant exemption orders have been gazetted.
Other offences
Although we have yet to see any enforcement under these provisions, the IRB has powers under the Stamp Act to impose further fines and penalties. We have set out below a few provisions extracted from the Stamp Act:
| Section under Stamp Act | Implication / Penalty | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Section 3A |
Powers of Collector Failure to provide the required information during audit constitutes an offense under Section 3A(5) of the Stamp Act and is punishable by a fine not exceeding RM10,000. |
||||||||
| Section 61 |
Penalty for not setting forth all the facts and circumstances Any person who with intent to evade the payment of duty:
|
||||||||
| Section 63 |
Penalty for executing and signing documents not duly stamped (1) Any person who:
*Exemptions under Section 63(4): Certain persons are not liable for the penalty under 63(1)(b) for specific documents.
|
||||||||
| Section 74 |
Fraud in relation to duty Any person who practises or is concerned in any fraudulent act, contrivance or device not specially provided for by law, with intent to defraud the Government of any duty, shall be guilty of an offence and shall be liable on conviction to a fine of not less than RM1,000 and not more than RM20,000. |
Are your documents exempted from stamp duty?
Certain documents are exempted from stamp duty under the First Schedule of the Stamp Act. Common examples include:
- Agreements relating to sale of goods, wares or merchandise (excluding hire-purchase);
- Employment contract with wages not exceeding RM300 per month;
- Value of matter less than RM300;
- Lease or agreement for lease if the annual rent does not exceed RM200;
- Instruments concerning only overseas immovable properties or actions;
- Power of Attorney solely for purpose of appointing proxy for company or association meeting;
- Insurance policy for sum insured less than RM5,000 (covers fire, accident, life, or sea insurance).
Please reach out to us if you need the full list of exemptions.
Can you appeal?
If your documents are overdue, you may still be eligible for the lower penalty (RM50 or 10%) under the Audit Framework. Duty payers can make a voluntary written declaration for documents which have exceeded the 3-month stamping deadline provided that an audit has not commenced.
Conclusion
The Audit Framework does not introduce new legal requirements, but it formalizes how the IRB will monitor, audit, and enforce what has always been required under the Stamp Act.
Currently, the IRB has introduced specific concessions in relation to employment contracts. However, other categories of contracts remain subject to the standard stamping requirements unless and until further announcements are made by IRB. If you’re unsure which documents are legally required to be stamped, or how the Audit Framework may impact your business or legal obligations, please seek professional advice to ensure full compliance and to fully understand the available concessions.
Prepared by Tan Jia Wen (Associate); Natalie Hong (Associate); and Melanie Fong (Partner).
Jeff Leong, Poon & Wong
Advocates & Solicitors
18-17-F&G Gurney Tower
Persiaran Gurney
10250 Penang
Malaysia
Telephone : +60 4 4127 388
Facsimile : +60 4 4127 883
E-mail : melanie.fong@jlpw.com.my
*Disclaimer: This update is for informational purposes only and does not constitute legal advice nor an expression of legal opinion. For assistance with legal matters, please contact us.
While we have made every attempt to ensure the correctness and accuracy of the information contained in this update, we are not responsible for any errors or omissions, or for any liabilities, damages or losses from the use of this information. You should not act or refrain from acting on the basis of any content included in this update without seeking legal or other
professional advice.