Starting January 2025, Malaysia’s Inland Revenue Board (LHDN) began actively enforcing the Stamp Act 1949 in relation to employment contracts. As a result, employment contract stamping is no longer something employers can afford to treat as a minor administrative step.
In Malaysia, employment contracts are generally subject to RM10 stamp duty for each original copy, and the requirement may also apply to certain renewals, addendums and other binding amendments. For employers, this makes it important to review whether current contract administration processes are still fit for purpose.
Below, we explain why this matters now, what contracts it applies to and what employers in Malaysia should take note of.
When does stamping need to be completed?
LHDN states that an employment contract must generally be stamped within 30 days from the date it is signed in Malaysia, or within 30 days from the date it is received in Malaysia if it was signed outside Malaysia.
Once assessed, the duty must be paid within 14 days after the notice of assessment, or within any other period allowed by the Collector.
If stamping is delayed, penalties may apply. The penalty is RM50 or 10% of the deficient duty, whichever is higher, if stamping is done within three months after the deadline. If stamping is done after three months, the penalty rises to RM100 or 20% of the deficient duty, whichever is higher.
What happens if a contract is not stamped?
An unstamped employment contract may still exist between the employer and employee, but it can create legal and procedural problems. For employers, this means the issue is not only about paying a small fee. It is also about making sure employment documents are properly completed and supported if they are ever needed as evidence in a dispute.
Does this only apply to new employment contracts?
Employers should not assume that only brand-new contracts need attention. LHDN materials indicate that each new employment agreement is treated as a separate instrument and that addendums may also be subject to duty if they operate as binding agreements.
This means renewals, extensions and other documented changes to employment terms may also need to be reviewed. The key issue is not the title of the document, but its legal effect. To reduce risk, employers should pay closer attention to documents such as:
- Fixed-term renewal letters
- Addendums to salary or benefits
- Revised terms following promotion, transfer or relocation
- Replacement or bilingual contract sets
What about older employment contracts?
LHDN introduced transitional relief for older employment contracts. Contracts finalised before 1 January 2025 were granted a stamp duty exemption. Contracts finalised from 1 January 2025 to 31 December 2025 remained subject to duty, but late penalties were remitted if stamping was completed on or before 31 December 2025. For contracts finalised from 1 January 2026 onwards, stamp duty applies and late penalties may be imposed where stamping is delayed.
This means the compliance risk is now more immediate for contracts entered into from 1 January 2026 onwards.
How are employment contracts submitted for stamping?
LHDN’s earlier guidance referred employers to the STAMPS system for submission, assessment and payment. However, the process has since moved, and the STAMPS portal now states that from 1 January 2026, e-Duti Setem is accessed through the MyTax portal under ezHASiL services.
For employers reviewing their process now, the more important point is that contract stamping should be treated as an ongoing compliance requirement, not simply a portal task.
What should employers do now?
For many employers, the biggest challenge is not the RM10 fee itself. It is making sure that every relevant employment contract or binding amendment is identified, submitted on time and supported with proper proof.
1. Review the types of documents you issue: Look beyond standard employment contracts. Renewals, extensions, side letters and amendment documents may also need to be assessed. LHDN guidance indicates that content, not title, determines whether a document is chargeable.
2. Build stamping into the onboarding process: A contract should not be treated as fully completed as soon as it is signed. The stamping step should also be tracked as part of the overall workflow.
3. Track post-signing changes centrally: Where terms change regularly, a decentralised process increases the chance that an amendment is issued but never reviewed for stamp duty.
4. Clarify internal ownership: Businesses should decide clearly whether HR, legal, finance, payroll or shared services owns the process in practice.
5. Keep proper records: Employers should be able to show which contracts were stamped, when they were submitted and where the supporting certificate is stored.
Managing employment contract compliance in Malaysia can become more complex as stamping requirements add another step to the process. Links International supports employers across Asia and the Middle East with HR and payroll administration, helping teams build more efficient workflows and stay on top of local requirements. Contact us today to learn more!
Important Links: