Compulsory for Employment Contracts to be Stamped Effective Next Year - IRB
The Inland Revenue Board (IRB) has announced that all employment contracts between employers and employees must be stamped starting January 1, 2026.
This directive is in line with the phased implementation of the Stamp Duty Self-Assessment System (STSDS) as outlined in the 2025 Budget.
In a statement [...], the IRB said it has already begun comprehensive stamp duty audit activities nationwide since January this year, following the issuance of the Stamp Duty Audit Framework (RKADS).
"Through the audit activities and compliance operations, one of the key findings has been that many employment contract documents between employers and employees have not been stamped as required under Item 4, First Schedule of the Stamp Act 1949, where the stamp duty is set at RM10," according to the statement.
It said to ease the burden on employers, the Ministry of Finance has agreed to exempt employment contracts executed before January 1, 2025, from stamp duty obligations.
This requirement is enforced based on the powers granted to the Minister of Finance under subsection 80 (1A) of the Stamp Act 1949 and the authority to remit late stamping penalties provided to the Collector of Stamp Duty under subsection 47A(2) of the Stamp Act 1949.
In addition, employment contracts finalized from January 1, 2025, to December 31, 2025, will be subject to stamp duty.
However, a remission of late stamping penalties will be granted, provided that the employment contracts are stamped on or before December 31, 2025. This relief is exercised under the powers of the Collector of Stamp Duty under subsection 47A(2) of the Stamp Act 1949.
According to the IRB, starting January 1, 2026, employment contracts finalized from that date onwards will be subject to stamp duty, and any delays in stamping will result in penalties being imposed.
In light of these developments, the IRB urges all employers to review and update existing and upcoming employment contracts to ensure full compliance with stamping requirements as stipulated under the Stamp Act 1949.
Source: Bernama - https://www.bernama.com/en/news.php?id=2431339
Click here for the official statement (in Bahasa Melayu)
