# Stamp Duty on Employment Contracts in Malaysia

> Employment contracts carry RM10 stamp duty under item 4 of the First Schedule — who pays, the exemption for contracts before 2025, and the penalty remission window that closed on 31 December 2025.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/taxation/stamp-duty-employment-contracts

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In June 2025 LHDN told employers something most had never considered: every
employment contract in the filing cabinet is a dutiable instrument, and the
audits had already started. The concession that followed has now expired, and
what replaced it is an ordinary compliance obligation with an ordinary penalty.

## What is chargeable, and how much

LHDN's position is that an employment contract creates a relationship between
employer and employee, is an instrument under s.2, and is chargeable under the
First Schedule by force of s.4(1).

The rate is **RM10 under item 4**, for **each original copy** of the contract.

Assessment follows contents rather than title. LHDN lists the markers of an
employment contract: identified employer and employee, periodic payment of
salary or wages, fixed working hours and place of work, compliance with employer
policies, benefits such as EPF and SOCSO contributions and annual leave, work
performed under the employer's direction and control, and a bar on working for
third parties without consent.

Where an instrument does **not** fall under item 4, LHDN treats it as a service
contract chargeable under **item 22(1)(a)** instead — which is ad valorem, not
RM10. A duplicate under s.12 carries RM10, provided the original is duly stamped.

## The RM3,000 exemption that changes the picture from 2026

Item 4 carries its own exemption for an agreement **for service or personal
employment**. Until the end of 2025 that exemption applied only where wages did
not exceed **RM300 per month** — a threshold set decades ago and low enough that
in practice every employment contract was dutiable.

The **Finance Act 2025 (Act 874)** substituted **RM3,000 per month** for RM300,
with effect from **1 January 2026**.

The consequence is substantial and almost entirely unreported: from 1 January
2026, an employment contract with monthly wages of **RM3,000 or less is exempt
from stamp duty** under item 4's own exemption. For a large part of the
workforce the RM10 charge simply does not arise.

Above RM3,000 a month, the RM10 remains payable and everything below applies.

## The three windows

This is the part that is widely garbled, because two different reliefs were
granted and only one of them was an exemption from duty.

| Contract finalised | Duty | Late-stamping penalty |
| --- | --- | --- |
| **Before 1 January 2025** | **Exempted** by the Minister of Finance under **s.80(1A)** | Remitted under **s.47A(2)** |
| **1 Jan 2025 – 31 Dec 2025** | **Payable** — no exemption | **Remitted** under s.47A(2), *only if* stamped on or before 31 December 2025 |
| **From 1 January 2026** | **Payable** | **Payable** — penalty applies in the ordinary way |

Note the middle row carefully. Contracts signed during 2025 were **never exempt
from duty**. They were only relieved of the penalty, and only if stamped inside
the window. That window closed on 31 December 2025. The remission was applied
automatically through STAMPS during the window; it is not available now.

## Deadlines and penalties

Under s.47 the contract must be stamped within **30 days** of signing in
Malaysia, or 30 days after it is first received in Malaysia if signed abroad.
Once assessed, the duty is payable within **14 days**, or such period as the
Collector allows.

Miss the 30 days and s.47A applies:

- **RM50 or 10%** of the deficient duty, whichever is greater, if stamped within
  three months after the deadline;
- **RM100 or 20%**, whichever is greater, thereafter.

On a RM10 duty the percentage limb is irrelevant — the penalty is RM50 or RM100
flat, five to ten times the duty itself. Across a few hundred employees that
arithmetic is what makes this a live issue rather than a rounding error.

Two further consequences: under **s.52** an instrument not duly stamped is
**inadmissible in evidence**, which matters the day you need to enforce a
restrictive covenant; and **s.63** provides a fine for executing an unstamped
instrument.

## The documents people forget

- **Renewals.** Every new contract is a separate instrument requiring its own
  stamping.
- **Addenda.** An IT usage policy or a benefits explanation letter signed by both
  parties is a binding agreement and is chargeable.
- **Study sponsorship offers.** Chargeable, but under **item 22(4)**.
- **Contracts in other languages.** For stamping, a contract in a language other
  than Malay or English must be translated line by line within the same
  document, by a certified translation service.

There is **no fee** for endorsing an exempted pre-2025 contract: under s.37(2A)
the RM10 endorsement fee applies only where the duty exceeds RM10 and is
exempted.

## Stamping in practice

Applications go through **STAMPS** at stamps.hasil.gov.my. Register a user ID
first: a company ID may submit for agreements belonging to the company and its
clients, while an individual ID is limited to personal agreements.

Inside STAMPS, select *Penyeteman Am* — general stamping — as the stamping
category, enter the date the agreement was signed, and choose **Employment
Contract** as the document title before uploading. An adjudication number is
issued on successful submission and becomes the reference for both the document
and the payment.

For applications other than transfers of real property, LHDN states that the
state stamp office will process a complete and orderly application and issue the
notice of assessment in **five to seven working days**. Payment can then be made
by FPX, or by virtual account where the amount exceeds the FPX transaction limit,
the bank has no FPX service, or payment is coming from overseas — a virtual
account number covers one adjudication number only, and confirmation takes at
least three working days.

That five-to-seven-day notice-of-assessment step is the formal-assessment
process. For an employment contract it has been overtaken by self-assessment:
because the contract is a general-stamping instrument inside Phase 1 (see below),
from **1 January 2026** the return you submit raises the assessment itself, and
there is no waiting for LHDN to issue a notice.

Once paid, the system generates a **stamp certificate**. That certificate must be
printed and attached to the original document: LHDN is explicit that a document
is not treated as stamped if the certificate is not attached to it.

Employers stamping in volume should not do this one contract at a time. LHDN
operates a **bulk stamping** route, requested through the feedback form on the
HASiL portal, which returns a user manual and an XML specification for batch
submission.

## Common mistakes

- **Reading the 2025 window as an exemption from duty.** It remitted the penalty
  only; the RM10 was always payable.
- **Assuming the concession still runs.** It ended 31 December 2025.
- **Stamping the contract but not the addendum.** Each binding document is its
  own instrument.
- **Not re-stamping on renewal.** A renewed contract is a new instrument.
- **Charging the RM10 to the employee.** The first signatory bears it, and that
  is normally the employer.
- **Treating interns and short-term staff as outside scope.** If an
  employer-employee relationship exists, the document is dutiable — subject now
  to the RM3,000 monthly wage exemption from 2026.
- **Applying the old RM300 exemption threshold.** It became RM3,000 a month on
  1 January 2026.

## What's next

Run an inventory by signing date, then by salary. Anything before 1 January 2025
is exempt from duty and can be endorsed free of charge if you want the
certificate on file. Anything signed during 2025 and still unstamped now carries
both duty and penalty, because the remission window has closed. From 1 January
2026, contracts above RM3,000 a month go through STAMPS inside 30 days as
routine, and those at or below RM3,000 fall within the item 4 exemption.

Employment contracts sit in the **general stamping** category, which is inside
Phase 1 of the stamp duty self-assessment system — so from 1 January 2026 you
assess the duty yourself rather than waiting for LHDN to tell you what it is.

## Sources

- Soalan Lazim — Penyeteman Kontrak Penggajian Di Malaysia — https://www.hasil.gov.my/wp-content/uploads/20250703-pkpe_faq-penyeteman-kontrak-penggajian-di-malaysia.pdf (LHDN)
- Media Release HASiL/2025/06/06 — 50, Stamp Duty Exemption for Employment Contracts Finalised Before 1 January 2025 — https://www.hasil.gov.my/wp-content/uploads/20250606_kenyataan-media-hasil_pengecualian-pengenaan-ds-untuk-kontrak-penggajian-yang-dimuktamadkan-sebelum-1-januari-2025.pdf (LHDN)
- Stamp Act 1949 (Act 378), text as at 1 January 2024 — https://lom.agc.gov.my/act-detail.php?act=378 (Attorney General's Chambers)
- Finance Act 2025 (Act 874) — amendment of the First Schedule, item 4 — https://lom.agc.gov.my/act-detail.php?act=874 (Attorney General's Chambers)

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