PETALING JAYA: No stamp duty will be imposed for employment contracts signed before Jan 1 this year while the penalty for late stamping will also be waived for contracts signed this year, the Inland Revenue Board (LHDN) announced.
The move provides temporary relief for employers as the maximum penalty is RM100 or 20% of the deficient duty, whichever is higher.
LHDN reminded that employment contracts signed between Jan 1 and Dec 31 this year will still be subjected to the stamp duty.
However, the penalty for late stamping can be waived on the condition that the contracts are stamped before the year ends.
From Jan 1, 2026, the mandatory stamp duty and penalty will be enforced for job contracts signed, LHDN said in a statement yesterday.
LHDN said the exemption of stamp duties and late stamping penalties for contracts signed before Jan 1 this year come following recent audit findings which include unstamped contracts as well as to reduce employers’ burden.
It explained that the Finance Minister has the power to exempt this duty under the Stamp Act 1949.
“Employment contracts finalised beginning Jan 1 next year, however, are subject to stamp duty and late stamping will incur penalties.
“All employers are required to review and update employment contract documents that will be and have been signed to ensure they adhere to regulations under the Stamp Act 1949,” it said.
Under the Stamp Act 1949, formal employment contracts are subjected to stamp duty at a flat rate of RM10 per contract.
The job contracts must be stamped within 30 days of their signing.
The penalty imposed for late stamping varies based on the period of delay.
