Mandatory for employment contracts to be stamped next year

This directive is in line with the phased implementation of the Stamp Duty Self-Assessment System as outlined in the 2025 budget.

The Inland Revenue Board urged all employers to review and update existing and upcoming employment contracts to ensure full compliance with the Stamp Act.

PETALING JAYA:

 The Inland Revenue Board (LHDN) has announced that all employment contracts between employers and employees must be stamped starting Jan 1, 2026.

LHDN said that starting Jan 1, 2026, employment contracts finalised from that date onwards will be subject to stamp duty, and any delays in stamping will result in penalties being imposed.

In a statement today, it said this directive is in line with the phased implementation of the Stamp Duty Self-Assessment System (STSDS) as outlined in the 2025 budget, Bernama reported.

LHDN said it has been conducting comprehensive stamp duty audit activities nationwide since January, following the issuance of the Stamp Duty Audit Framework.

“Through the audit and compliance operations, one of the key findings has been that many employment contract documents between employers and employees have not been stamped as required under Item 4, First Schedule of the Stamp Act 1949, where the stamp duty is set at RM10,” it said.

To ease the burden on employers, the finance ministry has agreed to exempt employment contracts executed before Jan 1, 2025 from stamp duty obligations.

Employment contracts finalised from Jan 1, 2025, to Dec 31, 2025, will also be subject to stamp duty. However, a remission of late stamping penalties will be granted, provided that the employment contracts are stamped on or before Dec 31.

LHDN urged all employers to review and update existing and upcoming employment contracts to ensure full compliance with the Stamp Act. - FMT