THE Inland Revenue Board of Malaysia (LHDN) has announced that all employment contracts between employers and employees will be required to be stamped from 1 January 2026, in line with the implementation of the Self-Assessment System for Stamp Duty (STSDS) announced under Budget 2025.
In a statement issued on Thursday, LHDN said the move follows a nationwide audit and compliance initiative which began in January, after the publication of the Stamp Duty Audit Framework (Rangka Kerja Audit Duti Setem, RKADS).
“In line with this decision, LHDN has commenced a comprehensive stamp duty audit across the country from January this year following the issuance of the Stamp Duty Audit Framework.
“Through the audit and compliance operations conducted, one of the key findings was that many employment contracts between employers and employees were not stamped in accordance with Item 4, First Schedule of the Stamp Act 1949, under which the applicable duty is RM10,” Bernama cited the statement saying.
To ease the transition, the Ministry of Finance has approved an exemption from stamp duty for employment contracts finalised before 1 January 2025. This is granted under the authority of subsection 80(1A) of the Stamp Act 1949.
In addition, contracts concluded between 1 January 2025 and 31 December 2025 will be subject to stamp duty but will be granted a waiver on late-stamping penalties, provided they are stamped by or before 31 December 2025. This waiver is granted under the authority of the Stamp Duty Collector, as provided under subsection 47A(2) of the Stamp Act 1949.
From 1 January 2026 onwards, all employment contracts will be subject to both stamp duty and penalties for late stamping if not processed in a timely manner.
“LHDN urges all employers to review and update their employment contracts, both existing and upcoming, to ensure full compliance with the stamping requirements under the Stamp Act 1949,” the statement added. - June 6, 2025
