Stamping of Agreement in Malaysia: A Comprehensive Guide
Stamping of agreement in Malaysia is a crucial step in ensuring a contract`s validity and legality. It is a mandatory requirement under Malaysian law that all agreements, leases, and contracts be stamped before or within 30 days of execution to legally bind the parties involved.
In this comprehensive guide, we will cover various aspects of stamping of agreement in Malaysia, including its significance, types of agreements, and the process involved in its stamping.
Why is Stamping of Agreement Significant?
Stamping of agreement is significant as it serves as proof that a particular contract or agreement has been executed and that the parties involved have agreed to its terms and conditions. Additionally, it is a legal requirement under the Stamp Act 1949 and is enforced by the Malaysian Inland Revenue Board (LHDN).
Failure to stamp an agreement may result in the following legal consequences:
– The agreement may not be admissible as evidence in court
– The parties involved may not be able to enforce the contract in a court of law
– The parties involved may face penalties or fines for non-compliance
Types of Agreements that require Stamping:
According to the Stamp Act 1949, the following types of agreements require stamping in Malaysia:
– Tenancy agreement and lease agreement
– Loan agreement and licensing agreement
– Partnership agreement and hire-purchase agreement
– Sales and purchase agreement
– Employment contract and service contract
– Loan and finance agreement
Process of Stamping of Agreement in Malaysia:
The process of stamping an agreement in Malaysia is relatively simple. It involves the following steps:
Step 1: Determine the Stamp Duty Payable
The amount payable for stamp duty depends on the type of agreement and the value of the contract. A stamp duty calculator is readily available on the LHDN website to help parties determine the amount of stamp duty payable.
Step 2: Purchase Stamp Duty
After determining the stamp duty payable, the parties involved can purchase the relevant stamp duty from any LHDN branch or authorised agent. Payment can be made via cash, cheque, or online banking.
Step 3: Stamp the Agreement
The stamped agreement should be signed by all parties involved and dated. A copy of the stamped agreement must be retained by each party for future reference.
In conclusion, stamping of agreement in Malaysia is a crucial legal requirement that must be adhered to when executing any contract or agreement. It ensures that the agreement is legally binding and enforceable, thereby protecting the interests of all parties involved. It is advisable to seek legal advice before executing any agreement to ensure compliance with the Stamp Act 1949.