New LHDN Stamping Rules 2026: How to Manage Compliance & Costs
The landscape of document legalization in Malaysia has shifted dramatically. On January 1, 2026, the Inland Revenue Board of Malaysia (LHDNM) officially implemented the Stamp Duty Self-Assessment System (SDSAS).
For decades, business owners and HR managers relied on LHDN officers to adjudicate documents and tell them exactly how much to pay. That era is over. Under the new system, the responsibility and the liability shifts entirely to you.
If you are an HR manager handling employment contracts or a business owner securing tenancy agreements, you are now expected to calculate your own duty. This guide breaks down exactly how the SDSAS works, the risks of miscalculation, and how to automate compliance using tools like Worksy.
What is the Stamp Duty Self-Assessment System (SDSAS)?
The Stamp Duty Self-Assessment System is a modernization initiative by LHDN to expedite the stamping process. Previously, under the Official Assessment system, you would submit a document, and an officer would manually review it to determine the duty payable. This often led to bottlenecks and delays.
Under SDSAS, the taxpayer (or their appointed agent) must determine the correct duty amount based on the Stamp Act 1949.
The Core Shift:
- Old Method (Before 2026): You submit -> LHDN calculates -> You pay.
- New Method (2026 Onwards): You calculate -> You submit -> You pay -> LHDN audits later.
This move mirrors the income tax self-assessment system. While it speeds up processing, it also increases the risk of penalties if you under-declare or misclassify an instrument.
| Feature | Official Assessment (Old) | Self-Assessment (New) |
| Responsibility | LHDN Officer | Taxpayer / Agent |
| Speed | Slower (requires adjudication) | Instant / Faster |
| Accuracy Risk | Low (LHDN decides) | High (You decide) |
| Audit Risk | Low | High (Post-stamping audit) |
Key Changes Effective January 1, 2026
The implementation of SDSAS is being rolled out in phases to allow businesses to adapt. As of February 2026, we are currently in Phase 1.
- Phase 1 Scope (Live Now)
The self-assessment system currently applies to the following instruments:
- Tenancy & Lease Agreements: Rental of immovable property.
- General Contracts: Service agreements, dealership agreements, and employment contracts.
- Security Documents: Loan agreements and mortgages (non-real estate transfer).
Note for Real Estate: The transfer of property (Forms 14A) is scheduled for Phase 2, expected to roll out in early 2027. For now, property transfers may still undergo a hybrid assessment.
- New Exemption Thresholds
To soften the transition, the government has introduced specific exemptions. A crucial update for HR managers is the relief for lower-tier employment contracts.
- Employment Contracts: Contracts where the annual income is below a specific threshold (updated to RM36,000/year in Budget 2026) may now be exempt from ad valorem duty, attracting only a nominal fee or full exemption depending on the specific clause.
- Digital Agreements: Digital-only contracts stamped via API (like those processed through Worksy) often qualify for expedited processing rebates.
Related Reading: Employment Contract Malaysia: Key Terms Guide
How Much is LHDN Stamping? (Calculating Costs)
One of the most common questions we receive is, “How much do I actually pay?” In the self-assessment era, you must distinguish between Fixed Duty and Ad Valorem Duty.
Fixed Duty vs. Ad Valorem Duty
- Fixed Duty (RM10): This applies to the duplicate copies of the original agreement. For example, if you sign an employment contract and need two original copies (one for the employer, one for the employee), the first copy attracts Ad Valorem duty, while the second copy costs a flat RM10.
- Ad Valorem Duty (Percentage-Based): This varies based on the value of the contract.
- Tenancy Agreements: Calculated based on annual rental exceeding RM2,400.
- Service Contracts: Usually a percentage (e.g., 0.5%) of the contract value.
The Cost of Miscalculation
If you calculate the duty incorrectly under SDSAS, LHDN may impose a penalty under Section 47A of the Stamp Act 1949.
- Late Stamping: Penalty ranges from 5% to 20% of the deficient duty, or RM25, whichever is higher.
- Incorrect Assessment: If an audit reveals you underpaid, you are liable for the difference plus a potential penalty.
Can Stamping Be Done Online? The Digital Workflow
Yes, stamping is now predominantly digital. The days of queuing at the stamp office with physical paper are ending.
- The Manual Online Method (MyTax Portal)
You can register as a user on the LHDN MyTax (STAMPS) portal.
- Pros: Direct access to government systems.
- Cons: It requires manual data entry for every single field. For an HR manager hiring 50 staff members, typing out 50 sets of passport numbers, addresses, and salary details is tedious and prone to human error.
- Automating withWorksy’sContract Stamping Services
For businesses handling bulk contracts such as HR departments or property managers, manual self-assessment is inefficient.
Worksy integrates contract generation directly with the stamping process.
- Auto-Calculation: Worksy’s algorithm is updated with the latest 2026 tax schedules. It automatically calculates whether an employment contract owes Ad Valorem or Fixed duty.
- Bulk Processing: Upload employee data once, generate 100 contracts, and stamp them all in a single click.
- Digital Audit Trail: Every stamped document is stored securely in the cloud, ready for any future LHDN audit.
Why Digitization Matters: As businesses embrace digital transformation, moving your legal compliance to a cloud-based HRMS is the logical next step to reduce administrative overhead.
Frequently Asked Questions (FAQ)
Yes. The system officially went live for Phase 1 instruments (Tenancy, Lease, and General Contracts) on January 1, 2026.
It is a tax system where the taxpayer is responsible for interpreting the law, calculating the tax payable, and making the payment. LHDN no longer issues a preliminary notice of assessment, they only validate the payment and issue the certificate.
If you overpay, the refund process can be lengthy (6-12 months). If you underpay, you are liable for the shortfall plus penalties. Using automated software like Worksy helps eliminate these calculation errors.
Not yet. The transfer of real estate titles (Forms 14A) is scheduled for Phase 2 implementation, likely in 2027.
Every digitally stamped document comes with a QR code and a unique serial number. You can verify the authenticity of the certificate via the LHDN MyTax portal or mobile app.
Conclusion
The shift to the Stamp Duty Self-Assessment System in 2026 places the power and the burden in the hands of business owners. While it promises faster turnaround times, it demands higher accuracy and knowledge of the Stamp Act.
For HR teams, this is a wake-up call to move away from manual processing. The risk of miscalculating duty for hundreds of employment contracts is simply too high.
Don’t let compliance slow you down. Explore Worksy’s Contract Stamping Malaysia Guide to understand how automating your entire contract lifecycle can ensure that you pay exactly what you owe no more, no less.
Disclaimer: This article provides general information current as of February 2026. For specific legal advice, please consult a qualified tax consultant or legal advisor.