SMEs & HR Alert: Exemption from Stamp Duty for Employment Contracts Finalized Before 1 January 2025
Starting 1 January 2025, the Inland Revenue Board of Malaysia (HASiL) began enforcing the Stamp Duty Audit Framework (RKADS) as part of the government’s new Self-Assessment Stamp Duty System (STSDS), set to roll out in phases from 1 January 2026.
This update directly impacts employers, HR professionals, and business owners issuing employment contracts. HASiL’s audits revealed many employment contracts were not stamped as required under the Stamp Act 1949, which imposes a RM10 stamp duty per contract.
To ease compliance burdens, the Ministry of Finance has announced the following important exemptions and deadlines:
Contract Finalization Date | Stamp Duty Requirement | Penalty Status | Additional Notes |
Before 1 January 2025 | Exempt from stamp duty | Penalties for late stamping waived | No action required |
Between 1 January 2025 and 31 December 2025 | Stamp duty payable | Penalties waived if stamped by 31 December 2025 | Must be stamped by deadline to avoid penalties |
From 1 January 2026 onward | Stamp duty payable | Penalties apply for late stamping | Full compliance required |
SMEs and HR departments are urged to review their current employment contracts immediately to ensure compliance with these updated regulations and avoid financial penalties. Timely action will help businesses stay ahead of regulatory enforcement and reduce risks associated with non-compliance.
