Malaysia Stamp Duty Overhaul

Employment Contracts Must Now Be Stamped (Effective 1 Jan 2025)
Source: Federation of Malaysian Manufacturing (FMM) & LHDNM

Dear Clients,

Lembaga Hasil Dalam Negeri Malaysia (LHDNM) has officially begun enforcing Stamp Duty on Employment Contracts starting 1 January 2025.

Under the new Stamp Duty Audit Framework, employers must ensure all employment contracts are properly stamped within the required timeframe to avoid penalties.

Here’s a summary of what you need to know:

Key Highlights

1. Stamping Now Mandatory for All Employment Contracts

• – All employment contracts or appointment letters (for both local and foreign workers) are now recognised as chargeable instruments under the Stamp Act 1949.
• – Must be stamped within 30 days from the date of execution.
• – Stamp duty: RM10 per contract.

2. Penalty for Late Stamping

• – If stamped more than 3 months late:
  • – Penalty is RM100 or 20% of deficient duty, whichever is higher.
  • – Penalty is system-generated, but appeals can be made via LHDNM’s platform.

3. Grace for Pre-2025 Contracts

• – Contracts dated before 1 Jan 2025 and still in force:
  • – Companies should stamp them and can appeal for penalty waiver.

4. Wage Threshold Under Review

• – Current exemption applies only if employee earns below RM300/month (outdated).
• – FMM has proposed a new threshold of RM10,000/month – under review by LHDNM.

5. Self-Assessment in Effect

• – Companies are now responsible to assess and ensure their own compliance.
• – This shift is part of LHDNM’s education-led enforcement.

6. Coverage Includes:

• – Long-term, short-term, and periodic contracts.
• – Foreign and local workers.
• – Internship offer letters – currently under review by LHDNM.

7. Compliance Tip

• – For resigned employees: If the contract is retained for HR/legal purpose, stamp it. If not, don’t keep it in the active file.
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What Should You Do Now?

• – Review all existing employment contracts.
• – Ensure stamping of all new contracts within 30 days.
• – Keep records of all stamped documents.
• – Appeal for waiver if any pre-2025 contracts are only now being stamped.