We set the context clearly: starting 1 January 2025, the Inland Revenue Board intensified enforcement under the Stamp Act 1949. This change makes stamping a core compliance requirement for companies and SMEs.
Under the new audit focus, employment documents are treated as instruments and generally attract a RM10 stamp duty per contract. Employers must stamp within 30 days of signing to avoid tiered penalties.
We explain practical benefits: timely stamping creates clean audit trails, stronger enforceability in disputes, and smoother onboarding. The STAMPS/MyStamp portal supports online calculation, digital franking, and issuance of a digital stamp certificate to reduce friction.
We will guide you through the requirement, who holds responsibility, which documents fall in scope, and how to adapt HR and finance workflows. Our aim is to make this legal shift manageable and to protect your company from unnecessary exposure.
Key Takeaways
➤ From january 2025, LHDN enforces stamping under the stamp act; treat it as mandatory.
➤ Most employment contracts attract RM10 stamp duty and must be stamped within 30 days.
➤ Use STAMPS/MyStamp for online stamping, digital franking, and a digital certificate.
➤ Timely stamping brings audit readiness, legal clarity, and onboarding benefits.
➤ Employers retain one stamped copy; employees may keep a copy at their cost.
➤ We will outline steps to integrate stamping into your HR and finance processes.
What changed in January 2025 and why it matters to employers
Beginning in january 2025, the tax authority stepped up coordinated audits that treat many signed workplace instruments as dutiable. This shift makes it essential that you review how your company handles signed agreements and records.
Legal basis: Under the stamp act 1949 (act 1949), employment contracts qualify as “instruments” even if not named explicitly. Interpretation by the authority means most employment contracts attract a RM10 duty per instrument.
Who is affected: SMEs, HR teams, company secretaries and employers who regularly sign employment agreements face the greatest exposure. LHDN commenced audits using the Stamp Duty Audit Framework with a look‑back covering 2022–2025.
Not every HR letter is in scope. Promotion, confirmation, resignation, increment and bonus letters are typically excluded. Secondment letters need not be stamped when the person remains employed by the same employer.
➤ Assign clear ownership across HR, legal and finance for stamping, payment and recordkeeping.
➤ Prioritize historical review to assess audit exposure and remediate where needed.
We address common questions and guide you to consistent, audit‑ready processes.
Malaysia Employment Contract Stamping: how to comply step by step
Start compliance by building a clear, repeatable process for signed agreements. We set out simple actions so your HR and finance teams meet the new requirement without disruption.
When: Stamp the employment contract within 30 days of signing. This deadline is the critical compliance checkpoint.
Where and how: Use the LHDN STAMPS/MyStamp portal to upload the document, auto-calculate stamp duty, complete online payment and receive digital franking plus a digital certificate.
➤ Who pays: The employer—the first executing party—bears the duty and must keep one stamped copy.
➤ Employee copy: Optional; the employee may obtain a copy at their own cost.
➤ What to stamp: New employment contracts, transfers to another company and fixed‑term agreements. Use rm10 for most contracts; apply ad valorem duty for a contract for service (RM1 per RM1,000, capped).
We recommend embedding a deadline checkpoint in onboarding SOPs and filing the digital stamp certificate with the signed agreement for audit readiness and internal faq reference.
Penalties, audits, and relief: navigating enforcement under the Stamp Duty Audit Framework
We outline precise penalty tiers, audit reach, and the portal route for relief applications so you can act fast and limit exposure.
Penalty tiers for late stamping
If stamping is late by 31 days to 3 months: a fixed fee of RM50 or 10% of the stamp duty, whichever is higher.
Beyond 3 months: the charge rises to RM100 or 20% of duty, whichever is higher. Quantify exposure by months to set remediation priorities.
Audit scope and look-back
The tax authority has begun focused audits covering recent years (notably 2022–2025). Prepare signed agreements, digital stamp certificates and related documents to support your position.
Penalty waiver pathway
Use the STAMPS/MyStamp portal and click “Kemuka Rayuan”. Attach a concise appeal letter citing Section 47A of the act 1949. Waivers are being considered where criteria are met.
“Contracts signed on or before 31 Dec 2025 that are stamped by that date may qualify for concessionary relief, subject to approval.”
Exemptions and practical steps
➤ There is an exemption for an employee earning below RM300; MEF has proposed raising this threshold.
➤ Routine HR letters generally do not require duty. Inter‑company transfer agreements and contracts for service need attention.
➤ Map unpaid items, estimate total stamp duty and penalties, then sequence payment across companies to reduce group risk.
➤ Assign owners, update your faq, and prepare concise responses to asked questions for audit readiness.
Next step: document approvals, keep clear records of payment and digital stamp evidence, and submit a portal appeal if remediation is needed.
Conclusion
To close, take immediate steps to review existing agreements and confirm which employment contracts fall in scope.
Stamp new contracts within 30 days via the STAMPS/MyStamp portal and keep one stamped copy on file. Most agreements attract RM10; a contract for service uses ad valorem duty.
Use the portal to calculate stamp duty, complete payment, and store the digital certificate with the signed document. File appeals via “Kemuka Rayuan” under Section 47A if relief is needed.
We recommend codifying responsibilities, updating your internal faq, and tracking deadlines to avoid penalties. Proactive stamping cuts audit risk, speeds onboarding, and delivers tangible benefits across HR and finance.
FAQ
From 1 January 2025, is stamping on employment contract compulsory?
Yes. From 1 January 2025, stamping of written employment agreements is mandatory under the Stamp Act 1949. Employers must ensure agreements are stamped within the prescribed timeframe to avoid penalties.
What changed in January 2025 and why does it matter to employers?
The change clarifies that written service agreements are instruments requiring stamp duty. This affects compliance, payroll administration, and document retention. Failure to stamp can trigger fines and audit attention, so employers should update onboarding and recordkeeping processes.
What is the legal basis for the requirement?
The requirement stems from the Stamp Act 1949, which treats certain written agreements as instruments liable to duty. Recent guidance confirms employment agreements fall within that scope, making them subject to stamping rules and potential audits.
Who is affected by this requirement?
SMEs, HR teams, company secretaries, and all employers across the country must comply. Any organisation that issues written service agreements or fixed-term contracts should review their templates and stamping workflows.
When must we stamp an agreement?
Agreements must be stamped within 30 days of signing. That window begins on the date the parties sign the instrument. Late stamping can attract penalties under the Stamp Act 1949.
Where and how can stamping be done?
Stamping can be completed via the LHDN STAMPS facility or the MyStamp portal. Options include electronic franking and online payment. Keep digital receipts and a stamped copy for the company file.
Who is responsible for paying the duty and keeping the stamped copy?
The employer is responsible for payment and for maintaining the stamped document. Employers should retain one stamped copy; providing a copy to the employee is recommended but not mandatory in every case.
Which documents must be stamped and which are excluded?
Written service agreements, fixed-term contracts, and certain transfer or secondment instruments generally require stamping. Routine letters that do not create contractual obligations, such as informal offer notes or reassignment communications, may be excluded. Review each document’s substance rather than its title.
How should fixed-term and existing agreements be handled?
Fixed-term and legacy agreements should each be stamped separately. Avoid rephrasing renewals as extensions to bypass new stamping obligations; stamping is required for each distinct instrument signed after 1 January 2025.
How much is the stamp duty for most agreements?
For the majority of written service agreements, the flat duty is RM10. Contracts structured as service agreements with monetary consideration may attract ad valorem duty instead; review the instrument type when calculating payment.
What are the penalties for late or non-stamping?
Penalties follow a tiered approach: an initial penalty equivalent to RM50 or 10% and a higher tier of RM100 or 20% (whichever is higher), subject to the Stamp Act provisions. Continued non-compliance increases audit risk and potential fines.
How does the audit and look-back work under the Stamp Duty Audit Framework?
LHDN may examine historical agreements during audits, typically covering recent years under review. Audits assess whether instruments were stamped, duty paid, and records kept. Employers should prepare documentation and proof of stamping for review.
Is there a penalty waiver or relief pathway?
Yes. Employers can submit appeals via the LHDN portal using the “Kemuka Rayuan” process and reference Section 47A where applicable. Early engagement and accurate documentation improve the chance of relief or reduced penalties.
Are there exemptions or proposed updates to the rules?
Discussions include proposals such as a sub-RM300 threshold for low-value instruments. Industry groups like the Malaysian Employers Federation have recommended clarifications and reliefs; however, any exemptions must be confirmed through official LHDN or legislative announcements.
What immediate steps should employers take to comply?
Review and classify all written instruments, update onboarding templates, set a 30-day stamping workflow, register for MyStamp or similar services, budget for duties and potential audits, and train HR and company secretarial teams on recordkeeping.
Disclaimer:
The information shared in this post is for general educational and reference purposes only. It does not constitute professional advice. Regulations and requirements may change from time to time. For guidance specific to your situation, please consult with our firm or a qualified professional.
