Introduction
Since January 2025, the Inland Revenue Board of Malaysia (“IRB”) has begun enforcing the long-standing requirement under the Stamp Act 1949, which mandates that employment contracts (including renewals of fixed term contract and transfer letters) be stamped within 30 days of execution, subject to a flat stamp duty of RM10.00 per contract.
Why the sudden attention to this requirement?
The IRB has introduced the Stamp Duty Audit Framework. This framework underscores IRB’s commitment to enhancing compliance through a structured audit mechanism. There was some confusion or lack of clarity in respect of the amnesty period
granted by IRB and critical waivers, but this has been resolved by the Press Statement issued by IRB on 6 June 2025.
Stamping Obligations/Amnesty
- Employment Contracts signed before 1 January 2025 are exempted from stamp duty, and a waiver will be granted for late stamping.
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Employment Contracts signed between 1 January 2025 and 31 December 2025 are subject to RM10.00 stamp duty and no penalties will be imposed if stamped on or before 31 December 2025.
- Employment Contracts signed from 1 January 2026 will be subject to the RM10.00 per contract and penalties for late stamping will be imposed.
Validity and Enforceability in Court
Pursuant to Section 52(1) of the Stamp Act 19047, a contract cannot be admitted as evidence in court unless it is duly stamped. Despite this, an unstamped employment contracts have been admitted as evidence in all levels of Courts in Malaysia, including the Industrial Court and Labour Court.
Conclusion
With the IRB stepping up enforcement and introducing the Stamp Act Audit Framework, employers are reminded to take steps to comply with the requirements. This includes stamping all new employment contracts within 30 days of execution and checking existing ones for compliance.
*Written by Athanasia Yolanda Bartolome, Associate
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