Great news for employers and HR teams in Malaysia! The Inland Revenue Board (LHDN) just rolled out a major update to stamp duty rules for employment contracts, giving businesses a much-needed breather before stricter enforcement kicks in.
Key Highlights of the Stamp Duty Exemption:
Full exemption for pre-2025 employment contracts
If your employment contracts were signed before 1 January 2025, relax—they’re now fully exempt from stamp duty and late penalties. This “amnesty” is LHDN’s way of helping employers who might’ve missed the stamping deadline unintentionally.
Penalty waiver for contracts signed in 2025
Contracts signed between 1 Jan – 31 Dec 2025 still need that RM10 stamp duty. But here’s the relief: no late penalties if you stamp them by 31 December 2025. Think of it as a “grace year” to get your paperwork sorted.
Full enforcement starting 2026
From 1 January 2026, it’s game on: stamp new contracts within 30 days or face penalties. The self-assessment system (STSDS) will be fully enforced, with fines applied automatically under the Stamp Act 1949.
Why the Shift?
LHDN isn’t just tightening rules—they’re giving businesses a runway to adapt. Here’s the backstory:
- Many companies slipped up: Audits showed widespread non-compliance with stamping.
- Preparation for full self-assessment in 2026: Like income tax, employers will soon self-manage stamp duty compliance (starting 2026), with penalties applied automatically for delays.
- Digital ease: The new STAMPS online portal makes stamping simpler. This transition period helps you adapt.
- Legal safety net: Stamped contracts hold up in court—critical for resolving disputes.
- Global alignment: Malaysia is catching up to global standards where formal contracts are non-negotiable.
Your Action Plan: 3 Things Employers Must Do
- Review your employment records to identify contracts signed before 2025. No stamping action is required for these.
2. Ensure all 2025 contracts are stamped via the LHDN STAMPS portal before year-end to avoid penalties.
3. Update internal compliance workflows to accommodate the full enforcement beginning in 2026.
Frequently Asked Questions (FAQ):
Do I need to stamp an employment contract signed in 2024?
No. Under LHDN’s exemption, contracts signed before January 1, 2025, are exempt from both duty and penalties.
What is the stamp duty for 2025 employment contracts?
RM10 per contract, but penalties are waived if stamped before December 31, 2025.
What happens if I stamp a 2025 contract after December 31, 2025?
Penalties will apply starting January 1, 2026, under the STSDS self-assessment system.
How do I stamp a contract online?
Visit the official LHDN portal at www.hasil.gov.my and use the STAMPS system to complete the process.
Stamping of Employment Contracts is Required by Law
Employers – this is your chance to fix past oversights and prepare for 2026’s stricter rules without incurring any penalty. Act before December 2025 to make the most of LHDN’s flexibility.
Should you require any assistance with the stamping process or compliance planning, feel free to contact our team for support.
