PETALING JAYA: Raising the salary threshold for exemption of stamp duty for employment contracts from RM300 to RM3,000, will help reduce operating costs for businesses, say employer groups.
“This is a timely and progressive measure that will help reduce business operating costs, particularly for employers in labour intensive sectors such as manufacturing, retail, agriculture and services, where large numbers of employees earn below RM3,000 per month,” said Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman.
He was commenting on the Budget 2026 announcement that the salary threshold for employment contracts exempted from stamp duty will be raised as part of efforts to boost business efficiency.
He said raising the exemption threshold limit, which comes into effect from Jan 1, 2026, will also simplify administrative processes for employers, especially micro, small and medium enterprises, therefore reducing the need for repeated documentation and payments for contract stamping.
It demonstrates the government’s understanding of the financial and compliance pressures faced by employers, particularly amid rising labour costs and post pandemic challenges.
“From a broader policy perspective, this initiative reflects the government’s commitment to creating a more conducive business environment and supporting formal employment practices.
“This is because more employers will be encouraged to properly document employment agreements without incurring additional costs,” he said.
SME Association of Malaysia president Dr Chin Chee Seong said businesses will save some RM10 per stamp duty processed for one employee.
He added that RM3,000 was a more realistic figure as not many earn RM300 in wages.
However, he said business may have some issues related to paperwork and compliance.
Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry (KLSICCI) president Nivas Ragavan said this would be helpful to businesses that hire low to mid-income workers.
“It directly reduces administrative and onboarding costs for employers, making it cheaper to formalise employment contracts.
“The adjustment from RM300 to RM3,000 is long overdue; it reflects the realities of today’s wage levels and encourages more companies to offer formal employment instead of informal or cash-based arrangements,” he said.
“This will also benefit young job seekers, part-timers and gig workers, as it promotes more transparent and structured hiring practices.”
