Stamp Duty Exemption for Employment Contracts Signed Before 1 January 2025

As part of the Government’s preparation for the implementation of the Self-Assessment System for Stamp Duty (STSDS) starting 1 January 2026, the Inland Revenue Board of Malaysia (LHDN) has announced key exemptions and deadlines for the stamping of employment contracts.

This follows the introduction of the Stamp Duty Audit Framework (RKADS) on 1 January 2025 and a nationwide stamp duty audit campaign to ensure compliance with the Stamp Act 1949.

Key Highlights of the Announcement

1. Full Exemption for Employment Contracts Finalised Before 1 January 2025

Employment contracts executed before 1 January 2025 are:

• Exempted from stamp duty (normally RM10 per contract under Item 4, First Schedule, Stamp Act 1949)

• Exempted from late stamping penalties

2. Grace Period for Employment Contracts Finalised in 2025

Employment contracts signed between 1 January and 31 December 2025:

• Subject to RM10 stamp duty

• Exempted from late stamping penalties, provided they are stamped on or before 31 December 2025

3. Full Enforcement Effective 1 January 2026

For employment contracts finalised from 1 January 2026 onwards:

• Stamp duty of RM10 is compulsory

• Penalties will apply for any delay in stamping

📌 What Employers Should Do Now

• Review all existing employment contracts, especially those signed before 2025, to determine whether stamping is required

• Ensure all new employment contracts signed in 2025 are stamped before 31 December 2025

• Prepare for full enforcement and possible penalties starting 1 January 2026

Reference (Official LHDN Media Statement dated 6 June 2025):

20250606_kenyataan-media-hasil_pengecualian-pengenaan-ds-untuk-kontrak-penggajian-yang-dim.

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