Updates on the Stamping of Employment Contracts under the Stamp Act 1949.

On 6 June 2025, the Inland Revenue Board of Malaysia (LHDN) issued a press release clarifying its position on the requirement to stamp employment contracts—a topic that has sparked significant discussion within the Human Resources community in recent months.

LHDN’s latest press release seeks to address any uncertainties and the key points, especially with regards to the requirement to stamp and late penalties have been summarised below-

1. Employment contracts executed before 1 January 2025: Stamp duty exemption and remission of late stamping penalties

    

2. Employment contracts executed from 1 January 2025 to 31 December 2025: Subject to stamp duty and are granted a remission of penalty for late stamping provided that the employment contract document is stamped on or before 31 December 2025.

    

3. Employment contracts executed from 1 January 2026 onwards: Subject to stamp duty and late stamping of the employment contract will be subject to appropriate penalty.

   
   

LHDN then issued an updated FAQ on 3 July 2025 to address lingering uncertainties and provide clearer direction on how the Stamp Act 1949 applies to employment contracts.

As such, all employers are required to review and update all employment contract documents that have been and will be signed to ensure compliance with the stamping requirements under the Stamp Act 1949. 

We have prepared a list of FAQs below for ease of understanding.

FAQs on Stamping Employment Contracts

1. Do I need to stamp my employment contracts now?
   

   Yes, but there is no need to rush! Remember, the exemption (against late penalties) has been granted and strictly speaking, all HR professionals will have to ensure that contracts are stamped before 31 December 2025.

   
   

   Please see table below:

For contracts executed pre-2025, LHDN has issued a clarification that employment contracts executed before 1st January 2025 may be submitted to LHDN for assessment and endorsement in order to obtain a certificate of stamp duty exemption. No late penalties or stamp duty charges will be imposed.

2. What about the fees for stamping and late penalty?

   The stamping fee remains at RM10 per contract. 

   Late penalties, applicable for contracts post 1 January 2026 shall be based on the following:

   
   

   • Within 3 months from the date of contract: RM50 or 10% of duty 

   • More than 3 months from date of contract: RM100 or 20% of duty 

     The penalty between RM value and % is based on whichever is higher.
     

3. What are the types of employment documents that must be stamped? 

   These employment documents are considered as agreements under the Stamp Act 1949 –

    

   1. Employment Contracts. This includes letter of appointment and/or offer letters.

   2. Letter of transfer where there is a change in entity e.g: if there the employee is transferred from one subsidiary to another group of companies. Internal transfers are not considered a transfer for such purposes.

   3. Fixed-Term Contracts. Any Fixed-Term Contracts that are renewed shall be stamped again.

   4. Apprenticeship Contracts.

4. Am I required to stamp employment related letters such as promotion, bonus, etc?

   No, there is no requirement to stamp letters for any changes in terms and conditions of service, these would include as follows - 
   

   1. Promotion and Bonus Letter

   2. Annual Increment Letter

   3. Letter of Transfer within the same Company which does not amount to a “New Employment”. 

   4. Secondment letter which does not amount to a “New Employment” 

   5. Internship Contracts.
      

5. What about Addendums or supplementary documentation to the Employment Contracts?

   An addendum or supplementary documentation which form terms and conditions of the employment are considered an instrument and is subject to stamp duty.

   
   

6. How about a transfer to another entity?

   If the transfer results in a change of hiring entity (employer) and a new contract of employment is issued, then stamping of the new agreement is required.
   

7. How do I stamp my employment contracts?

   Stamping is now done online and can be stamped through LHDN’s online STAMPS system at https://stamps.hasil.gov.my/stamps/ You may refer to the user manual and FAQ’s on STAMPS for further detailed information. 
   

   Through this system, you will be able to upload your employment contracts, calculate the amount payable, pay the necessary amount and download a certificate containing the stamp. 
   

8. Can I deduct the stamping amount from the employee's wages?

   No, this is not a permitted deduction. Employers will have to bear the cost for stamping.
   

9. I need help with stamping the contracts. Who can I contact from your organisation?

   Please contact any one of our Consultants or drop us an email at consultants@e2consulting.com.my.