(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 9

(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 9

Audit Notice from LHDN: Are Your Documents Ready?

Certainly! Here’s the expanded version in your usual professional but simple English writing style — clear, engaging, and tailored to grab the attention of SME bosses:

If you’re running a business and think stamp duty is just a small matter, think again.

Lately, we’ve seen an increase in stamp duty audit notices issued by LHDN. And yes, officers from the Inland Revenue Board will visit your company premises. These aren’t random spot checks — they are part of LHDN’s push to enforce compliance under the self-assessment system, similar to what we already see with income tax and company tax audits.

In short, stamp duty audit is the new norm.

Why is LHDN auditing?

The purpose is very clear.
LHDN wants to check whether your company has properly stamped all documents and agreements that are legally required to be stamped under the Stamp Act 1949.

They’re not only looking at your latest documents — they will go back 2 to 3 years. If anything is missed, penalties can be steep.

What documents will LHDN request?

Based on Section 3A of the Stamp Act 1949, your company is legally required to cooperate during the audit and provide documents for review. These may include:

  • Tenancy agreements for office, factory, warehouse, or shoplots

  • Property transfer agreements, especially those between directors or related companies

  • Service contracts with consultants, freelancers, or third-party providers

  • Sales and purchase agreements for assets, equipment, shares, or businesses

  • Letter of Award (LOA) issued to contractors or suppliers

  • Subcontractor agreements in any industry — including construction, logistics, or services

  • Advances to or from directors, shareholders, or related companies

  • Any other formal or informal agreement involving money or obligation

Why should SME owners take this seriously?

Let’s be honest … many SME bosses sign agreements without realising they need to be stamped.
Some don’t even know that e-signature or soft copy PDFs still require stamping.
Worse, some think that if no lawyer was involved, the agreement is exempt. Unfortunately, that's not true in the eyes of LHDN.

If LHDN finds any unstamped document, they are empowered to impose a penalty of up to 3 times the original stamp duty.

Let’s say you have a service agreement worth RM100 in stamp duty.

If it was never stamped, the penalty can easily become RM300 — or more, depending on the delay.

Imagine this across 10 documents over 3 years.
That’s RM3,000 in penalties for something that could’ve been avoided by paying RM1,000 in the first place.

What can you do now?

At KTP, we recommend all clients to perform an internal stamp duty review — especially if you’ve signed any agreements over the past few years.

We help SMEs:

  • Identify which documents must be stamped

  • Review existing contracts and provide practical advice

  • Liaise with LHDN if a penalty needs to be negotiated

  • Avoid future penalties with proper processes

Final Word

Stamp duty audit is no longer rare.
SMEs are no longer “under the radar.”
And ignorance is no longer an excuse.

Past blog on Stamp Duty
16 April 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties
https://www.ktp.com.my/blog/malaysia-stamp-duty-self-assessment/16apr2025

16 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 2
https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part2/16may2025

20 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 3 https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part3/20may2025

21 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 4

https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part4/21may2025

26 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 5

https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part5/26may2025

27 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 6

https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part6/27may2025

29 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 7

https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part7/29may2025

3 June 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 8

https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part8/03june2025

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