Employment contracts signed before 1 Jan 2025 will be exempted from stamp duty in Malaysia: HASiL

Meanwhile, employment contracts signed from 1 January to 31 December 2025 will be subject to stamp duty; but may have their late stamping penalty waived if the employment contract has been stamped on or before 31 December 2025.

Employment contracts signed before 1 January 2025 will be granted exemption from stamp duty and have the penalty for late stamping waived, the Inland Revenue Board of Malaysia (HASiL) said on Friday (6 June 2025).

The exemption comes as the Ministry of Finance exercises its rights under subsection 80(1A) of the Stamp Act 1949 (the Act), while the penalty waiver comes from the Collector of Stamp Duty under subsection 47A(2) of the Act.

Meanwhile, employment contracts signed from 1 January to 31 December 2025 will be subject to stamp duty; but may be granted a waiver on the penalty for late stamping if the employment contract has been stamped on or before 31 December 2025.

The above aside, the tax authority has shared that employment contracts finalised from 1 January 2026 will be subjected to stamp duty, and any delays in stamping these contracts will incur the relevant penalties. 

Recap: What are stamp duties, and to whom do they apply?

As shared by HASiL, stamp duties are imposed on instruments and not transactions. An instrument is defined as any written document and in general, stamp duty is levied on legal, commercial, and financial instruments.

For employers, the rules of the Act apply to:

• Full-time employment agreements
• Fixed-term/contract-based employment agreements
• Internship agreements
• Part-time contracts

The following organisations/firms/entities can tap on HASiL's Stamp Duty Assessment and Payment System (STAMPS):

• Law firms
• Banks
• Insurance companies
• Other registered agents/companies
• Individuals

The person liable to pay stamp duty is set out in the Third Schedule of the Act.

The relevant deadlines for an instrument to be stamped are as follows:

• If the instrument is executed in Malaysia, it must be stamped within 30 days of execution.
• If it is executed outside of Malaysia, it must be stamped within 30 days of being received in Malaysia.

If the instrument is not stamped within the stipulated period, the penalty imposed is based on the delay period as follows:

• RM50.00 or 10% of the deficient duty, whichever is higher, if stamped within 3 months after the time for stamping, or
• RM100.00 or 20% of the deficient duty, whichever is higher, if stamped after 3 months from the time for stamping.

The above rates are effective 1 January 2025.

Lead image / 123RF
Article image / Screenshot from Stamp Act 1949, HASiL's website