2026 LHDN Malaysia Stamp Duty Guide for Employment Contract
- managementkalyx
- Jan 9
- 2 min read
Under the Stamp Act 1949, employment contracts in Malaysia are subject to stamp duty requirements to ensure their legal validity. Stamping is not merely an administrative step; it is a statutory obligation that makes the contract enforceable in court.
With recent updates from the Inland Revenue Board of Malaysia (LHDN), including the Stamp Duty Audit Framework (effective 2025) and the upcoming Self-Assessment System for Stamp Duty (STSDS) in 2026, stamping has become an essential compliance measure for all businesses.
What is an Employment Contract?
An employment contract is a written agreement between an employer and an employee. It sets out
Job title and responsibilities
Working hours and leave entitlements
Salary and benefits
Termination conditions
Employment Contract Stamp Duty
This statutory obligation encompasses all types of service agreements, including contracts for permanent staff, part-time employees, and interns, as long as the agreement establishes an employer-employee relationship. The stamp duty applicable to an employment contract is determined by its date of execution.
It is critical to note that a duty exemption does not waive the stamping requirement. All contracts must be processed via the LHDN MyTax portal to obtain an official Stamp Certificate. This is a statutory prerequisite under Section 52 of the Stamp Act 1949 to ensure the document is legally admissible in court.
Signed before 1 January 2025
Fully exempt from stamp duty and no penalty apply.
Signed between 1 January 2025 and 31 December 2025
Stamp duty applies, but any penalties for late payment are waived.
Signed on or after 1 January 2026
Stamp duty applies to contracts with monthly salaries above RM3,000. Must be stamped within 30 days, and penalties will be enforced for late submission.
This applies to permanent staff, part-time staff, and interns if their pay exceeds the threshold.
When Must Be Stamped
Under the Stamp Act 1949, all employment contracts must be stamped within 30 days from the date it is executed in Malaysia or within 30 days after it is received in Malaysia if it is executed outside Malaysia.
If it is not stamped within the stipulated period, the penalty imposed is based on the delay period as follows:
Delay up to 3 months: RM50 or 10% of the duty (whichever is higher).
Delay exceeding 3 months: RM100 or 20% of the duty (whichever is higher).
Penalty Exemption for Transition Period
From 1 January 2026 to 31 December 2026, LHDN provides a one-year grace period under the Self-Assessment System for Stamp Duty (STSDS). During this transition, penalties will not be imposed for errors or inaccurate information in the Stamp Duty Declaration Form
However, if employers fail to submit or submit late, penalties will still apply.
