by DayakDaily Team
KUCHING, June 6: The Inland Revenue Board of Malaysia (LHDN) has announced that employment contracts finalised before January 1, 2025, will be exempt from mandatory stamp duty.
The exemption aims to ease the administrative burden on employers, particularly in light of the large number of employment contract documents involved and the fact that a recent audit found many employment contracts were not duty-stamped.
In a statement today, LHDN said the decision was made by the Ministry of Finance under the authority granted to the Minister of Finance by subsection 80(1A) of the Stamp Act 1949. Any penalties for late stamping of contracts finalised before January 1, 2025 will be waived under subsection 47A(2) of the same Act.
For contracts signed between January 1 and December 31, 2025, the tax authority stated that stamp duty will apply. However, late stamping penalties will be waived, provided the contracts are stamped on or before December 31, 2025.
Employment contracts signed from January 1, 2026 onwards are subject to stamp duty and delays in stamping employment contracts will incur appropriate penalties.
“All employers are required to review and update all employment contract documents that have been and will be signed to ensure compliance with the stamping requirements under the Stamp Act 1949,” it said.
Of note, as announced in Budget 2025, the government will implement the Stamp Duty Self-Assessment System (STSDS) in stages starting January 1, 2026.
In preparation for this, LHDN introduced the Stamp Duty Audit Framework (RKADS) on January 1, 2025, to outline the procedures for a comprehensive stamp duty audit. Since then, stamp duty audit activities have commenced nationwide.
Employment contracts between employers and employees are subject to a RM10 stamp duty, as stipulated in Item 4 of the First Schedule of the Stamp Act 1949. – DayakDaily
