Stamp Duty Update: Exemption for Employment Contracts Signed Before 2025
KUALA LUMPUR, 6 June 2025 – The Inland Revenue Board (LHDN) has issued an important update concerning stamp duty requirements for employment contracts, providing much-needed clarity for employers nationwide.
Summary of Stamp Duty Requirements for Employment Contracts
To ease compliance and reduce the burden on employers, LHDN has introduced a phased approach for enforcing stamp duty on employment contracts:
| Contract Signing Period | Do You Need to Stamp? | Deadline |
|---|---|---|
| Before 1 January 2025 | ✅ Must stamp (duty & penalty waived) | No deadline |
| 1 January – 31 December 2025 | ✅ Must stamp (penalty waived) | 31 December 2025 |
| From 1 January 2026 onwards | ✅ Must stamp (penalty applies) | Within 30 days of signing |
Key Points for Employers
Contracts Signed Before 1 January 2025
- Must be stamped to obtain an official Exemption Certificate for these contracts.
- Exempted from RM10 stamp duty
- No late stamping penalties
Contracts Signed Between 1 January – 31 December 2025
- Must be stamped at RM10 per contract
- Penalty for late stamping is waived
- Applies even if the employee has resigned
- Must be stamped on or before 31 December 2025
Contracts Signed From 1 January 2026 Onwards
- Must be stamped at RM10 per contract
- Must be stamped within 30 days
- Penalty applies for any delay, as enforced under the Stamp Act 1949
- Late by 31 days to 3 months: RM50
- Late by more than 3 months: RM100
Why Is This Important?
Although the RM10 stamp duty per contract has existed under the Stamp Act 1949, enforcement was minimal in the past. However, a recent national audit revealed widespread non-compliance, and the LHDN is tightening enforcement, particularly with the introduction of a self-assessment stamping system announced under Budget 2025.
This exemption and grace period aim to ease the transition and allow employers to regularize past and current contracts.
What You Should Do Now
- Review and classify all employment contracts according to the signing date.
- Stamp contracts signed in 2025 before 31 December 2025.
- Implement SOPs to stamp all new contracts within 30 days starting 2026.
- Maintain a stamped copy of contracts in your employee records for audit purposes.
📄 Official Source:
LHDN Media Release (6 June 2025) – Exemption of Stamp Duty for Employment Contracts Signed Before 2025 (PDF)
