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InsightSpotlight

Stamp Duty on Employment Contracts: What Employers Need to Know for 2025

June 17, 2025June 24th, 20253 min read

Starting 1 January 2025, the Inland Revenue Board of Malaysia (LHDN) will enforce a Stamp Duty Audit Framework that requires all employment contracts—whether for local or foreign workers—to be stamped within 30 days of signing.

This new requirement has significant implications for employers across Malaysia, particularly those managing large volumes of contracts or handling foreign worker onboarding. Here’s what you need to know.

Who Does This Apply To?

All employment contracts, regardless of duration or role type:

  • Full-time and part-time
  • Fixed-term and short-term
  • Local and foreign employees

Internship agreements are currently excluded.

Key Requirements

  • Stamp Duty Fee: RM10 per employment contract
  • Stamping Deadline: Within 30 days of contract signing
Penalties for Late Stamping:
Timeframe Penalty
Within 3 months RM50 or 10% of stamp duty (whichever is higher)
After 3 months RM100 or 20% of stamp duty (whichever is higher)

Retrospective Audits: Contracts from 2022 Also Affected

The audit framework includes a retrospective check of employment contracts signed from 1 January 2022 onwards. Employers are expected to ensure past contracts are also in compliance.

Transitional Relief and Unresolved Questions

LHDN has indicated a general amnesty period for earlier contracts, but full procedural clarity is still evolving:

Contract Date Stamp Duty Required Penalty Status
1 Jan 2022 – 31 Dec 2024 Yes Waived for now (subject to confirmation)
1 Jan – 30 Apr 2025 Yes Penalty may apply, case-by-case waiver possible
1 May 2025 onward Yes Full penalties will apply

Employers should also note that once a contract’s start date is entered into the online STAMPS system, any delay will automatically trigger a penalty, requiring a formal appeal for waiver.

Several uncertainties remain:

  • Should offer letters and employment contracts both be stamped?
  • Do handbooks or related HR documents also require stamping?
  • Are expired contracts (signed within the last 3 years) subject to audit and penalty?

Industry groups including FMM and SEA are actively engaging LHDN for clarification.

What Should Employers Do Now?

  1. Review Contracts Since 2022: Audit all employment contracts signed since 1 January 2022 and stamp those that have not yet been processed.
  2. Update Onboarding Procedures: Integrate stamp duty compliance into your HR process to avoid delays and future penalties.
  3. Use LHDN’s STAMPS System: Submit contracts and pay stamp duty online via the STAMPS portal.
  4. Stay Alert for Updates: Monitor announcements from LHDN, the Federation of Malaysian Manufacturers (FMM), and other official channels for evolving guidelines.

Final Thoughts

Now that the Stamp Duty Audit Framework is fully enforced, employers must ensure strict compliance, its rollout raises many operational challenges for employers—particularly those managing large-scale or complex employment arrangements.

At Osadi, we support our clients in staying ahead of regulatory changes. Our experienced team ensures that your workforce documentation is not only complete but compliant—reducing legal risks and avoiding unnecessary penalties.

Need help reviewing or processing your employment contracts?
Talk to us today.