Published On: 08/07/2025By

On July 3, 2025, Malaysia’s Inland Revenue Board (LHDN) released an official FAQ to clarify the mandatory stamp duty requirement on employment contracts — just one month after the announcement sparked widespread attention.

While the FAQ aimed to provide clarity, it also raised more questions among employers, especially SMEs. In this article, we summarize the key takeaways from the FAQ to help HR managers, business owners, and corporate advisors stay compliant with the Stamp Act 1949.

1. Is stamping employment contracts mandatory in Malaysia?

Yes. Under Section 4(1) of the Stamp Act 1949, all instruments listed in the First Schedule must be stamped — including employment contracts.

2. Why is stamp duty important for employment contracts?

According to Section 36 and Section 52, an unstamped employment contract is inadmissible as evidence in court, which can significantly impact legal enforceability.

3. What qualifies as an employment contract?

Any document that establishes an employer-employee relationship. Common indicators include:

  • Names and roles of employer and employee

  • Fixed salary or wages

  • Work schedule and location

  • Compliance with company rules

  • Provision of EPF, SOCSO, annual leave, etc.

  • Employee works under employer’s direction

  • Employee cannot take on other jobs without employer’s approval

This includes: offer letters, appointment letters, fixed-term contracts, contract renewals, secondment letters.

What about internal memos like promotions or bonuses?
If the document outlines employment terms and is signed by both parties, it may also require stamping.

4. Do temporary, part-time, or contract workers need stamped contracts?

Yes. All employment contracts, regardless of job type, must be stamped.

5. Do contract renewals require stamp duty again?

Yes. Each renewed contract is considered a new instrument and must be stamped accordingly.

6. What if I only issue an offer letter with employment terms?

If the offer letter is the sole document establishing the employment relationship, it must be stamped.

7. Are interns or trainees with allowance contracts required to pay stamp duty?

Yes — if the letter proves an employer-employee relationship.

8. Do supplementary documents need to be stamped?

Yes, if both employer and employee sign them and they are part of the employment agreement.
This includes:

  • IT Policies

  • Employee benefit letters

  • Training sponsorship agreements (Stamp Act First Schedule Item 22(4))

9. Can contracts be written in other languages?

Yes, but you must attach a certified line-by-line English or Malay translation before stamping. Certification must come from Malaysian Translators Association (PPM) or ITBM.

10. Who pays the stamp duty — employer or employee?

Whoever signs first pays the stamp duty. In most cases, it’s the employer.

11. What is the stamping deadline?

  • Signed within Malaysia: stamp within 30 days

  • Signed overseas: stamp within 30 days of arriving in Malaysia

After LHDN’s assessment, payment must be made within 14 days.

12. How much is the stamp duty?

  • RM10 per original copy

  • RM10 per copy (only if the original is already stamped)

  • If it’s a service agreement (not employment-related), different rates under Item 22(1)(a) may apply

13. What are the penalties for late stamping?

  • Within 3 months: RM50 or 10% of the stamp duty (whichever is higher)

  • Over 3 months: RM100 or 20% of the stamp duty (whichever is higher)

14. Who qualifies for stamp duty exemptions?

  • Contracts signed before 1 Jan 2025: fully exempt

  • Contracts signed in 2025: no penalty if stamped before 31 Dec 2025

  • Contracts signed from 2026 onwards: full duty and penalties apply if late

15. Can old contracts be submitted for exemption stamping?

Yes. Submit older contracts to LHDN for assessment and official exemption stamping.

16. Is there a fee for exemption stamping?

No, unless the contract originally required duty exceeding RM10 — in that case, you pay RM10.

17. Must employment contracts be stamped if signed after 1 January 2025?

Yes. Employment contracts signed on or after 1 January 2025 must be submitted to LHDNM for stamping in accordance with subsection 4(1) of the Stamp Act 1949.

18. What if contracts are stamped late after 2025?

As long as stamping is completed before 31 Dec 2025, no penalty applies.

19. Will the STAMPS system automatically waive penalties?

Yes. For contracts signed in 2025, the system will automatically waive penalties if submitted on time.

20. What about contracts signed from 2026 onwards?

  • RM10 stamp duty per contract

  • Penalties apply for any late stamping

21. How to use the STAMPS system to stamp employment contracts?

  • Register at: https://stamp.hasil.gov.my

  • Select “Penyeteman Am” (General Stamping)

  • Choose “Employment Contract”

  • Upload your document and submit

  • Pay online and print the digital stamp certificate to attach to the contract

22. What payment methods are accepted?

  • FPX online banking (fastest option)

  • Virtual Account (VA) — suitable for bulk or overseas payments

23. How to apply for bulk stamping?

Submit your request via LHDN’s feedback portal:
https://maklumbalaspelanggan.hasil.gov.my/Public
LHDN will provide technical guidelines for bulk submissions.

Special Reminder for SMEs:

  • Stamp duty on employment contracts is now mandatory, not just for large companies

  • Offer letters, renewals, secondments — all must be stamped

  • Assign a dedicated staff to manage stamping via the STAMPS system

  • Early preparation saves time, avoids penalties

  • For old contracts signed before 2025, consider submitting for exemption marking

Final Thoughts

While the RM10 stamp duty per contract may seem insignificant, failure to comply could result in hefty penalties and legal complications. With the latest enforcement by LHDN, employers — especially SMEs — should act promptly to ensure all employment documents are properly stamped and documented.

If your HR team needs help streamlining contract compliance or document management, consider using an HR software solution like Pandahrms to automate workflows, reduce risk, and ensure you’re always one step ahead of regulatory changes.

🔗 Source: LHDN Malaysia – FAQ on Stamping of Employment Contracts (Published 3 July 2025)