(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 5

(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 5

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  • Current exemption applies only if employee earns below RM300/month (outdated).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.

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.

Past blog on Stamp Duty
16 April 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties
https://www.ktp.com.my/blog/malaysia-stamp-duty-self-assessment/16apr2025

16 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 2
https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part2/16may2025

20 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 3 https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part3/20may2025

21 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 4

https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part4/21may2025

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