FAQ: Stamp Duty on Employment Contracts 2025 (Malaysia)

Everything Employers & HR Teams Need to Know About Stamping Employment Contracts

Stamping employment contracts is mandatory under the Stamp Act 1949. Proper stamping ensures legal compliance, protects both employers and employees, and ensures that employment contracts are admissible as evidence in court.

As a Chartered Accountants Johor Bahru, Tax Agent Johor Bahru, and Accounting Firm Johor Bahru, we have prepared this comprehensive FAQ to guide employers, HR teams, and business owners.

1️⃣ Is it mandatory to stamp employment contracts?

Yes.
Under Subsection 4(1) of the Stamp Act 1949, all instruments listed in the First Schedule must be stamped at the prescribed rate. Employment contracts, which establish an employer–employee relationship, fall within this requirement.

2️⃣ Why is stamping employment contracts important?

Stamping ensures:

• Compliance with Section 36, Stamp Act 1949

• Employment contracts are admissible in court (Section 52)

• Legal enforceability of contractual rights and obligations

Failure to stamp may expose employers to penalties and legal risks.

3️⃣ What are the characteristics of an employment contract?

An agreement is generally considered an employment contract if it includes:

a) Clearly identified parties (employer & employee)
b) Salary or wages paid regularly
c) Working hours and work location
d) Compliance with company policies and procedures
e) Employee benefits (EPF, SOCSO, leave, etc.)
f) Employer’s control and supervision over work
g) Exclusivity clauses restricting other employment

💡 Contracts with these characteristics are subject to RM10 stamp duty under Item 4, First Schedule, Stamp Act 1949.

4️⃣ Do temporary, short-term, part-time, or contract workers’ agreements need stamping?

Yes.
Section 2 of the Stamp Act 1949 defines an “instrument” broadly. All written employment agreements, regardless of duration or position, must be stamped.

5️⃣ Do renewed employment contracts require stamping?

Yes.
Each renewed or newly issued employment contract is treated as a separate instrument and must be stamped individually.

6️⃣ Is a job offer letter subject to stamp duty?

Yes.
If the job offer letter is the only document establishing the employment relationship, it is considered an employment contract for stamp duty purposes.

7️⃣ Are internship or trainee agreements stampable?

Yes.
Where an internship or trainee agreement creates an employer–employee relationship, it is subject to stamp duty, even if only allowances or stipends are paid.

8️⃣ Are supplementary documents stampable?

Yes.
Any binding addendum or supplementary document is considered an instrument and subject to stamp duty, including:

• IT & system usage policies

• Benefits or allowance letters

• Employer-sponsored study or bond agreements

9️⃣ Can employment contracts be in languages other than Malay or English?

Yes, but for stamping purposes, the contract must be accompanied by a line-by-line translation within the same document, certified by recognised bodies such as:

• Persatuan Penterjemah Malaysia

• Institut Terjemahan & Buku Malaysia

🔟 Who is responsible for paying stamp duty?

• Under Section 33, Stamp Act 1949, the first signatory is responsible

• In practice, the employer usually signs first and bears the cost

1️⃣1️⃣ What is the deadline for stamping?

• Within 30 days from signing if executed in Malaysia

• Within 30 days from receipt in Malaysia if signed abroad

• Payment must be made within 14 days or as allowed by the Collector

1️⃣2️⃣ What is the stamp duty rate?

• Standard employment contract: RM10 per original copy

• Duplicate copy: RM10 (if original is duly stamped)

1️⃣3️⃣ What are the penalties for late stamping?

1️⃣4️⃣ Are there stamp duty exemptions?

Yes, based on LHDNM concessions:

• Contracts executed before 1 Jan 2025 → Full exemption

• Contracts from 1 Jan – 31 Dec 2025 → Penalty waiver if stamped by 31 Dec 2025

• Contracts from 1 Jan 2026 onwards → RM10 stamp duty applies + penalties for late stamping

📌 Refer to LHDNM Media Release: Pengecualian Duti Setem

1️⃣5️⃣ Do exempt contracts still need submission?

Yes.
Exempt contracts should be submitted to LHDNM for assessment and endorsement to obtain official proof of exemption.

1️⃣6️⃣ How is stamping done via STAMPS?

1. Register at 👉 https://stamp.hasil.gov.my

2. Upload the employment contract

3. Select document type: “Employment Contract”

4. Submit for adjudication and obtain Adjudication Number

5. Make payment via FPX or Virtual Account

6. Download the Stamp Certificate and attach it to the contract

🔹 Group submissions: https://maklumbalaspelanggan.hasil.gov.my/Public/

1️⃣7️⃣ What payment methods are available?

• FPX online payment

• Virtual Account (VA) – suitable for bulk or overseas payments

• One VA is issued per adjudication number

💼 Need Professional Assistance?

As licensed Tax Agents Johor Bahru, Audit Firm Johor Bahru, and Accounting Firm Johor Bahru, we assist with:

• Employment contract stamping

• STAMPS submissions & adjudication

• Late stamping penalty advisory

• Corporate & HR compliance guidance

📞 Contact us today to ensure your employment contracts are compliant, enforceable, and penalty-free.