Malaysia´s Inland Revenue Board (IRB) announces mandatory stamping for employment contracts

The Inland Revenue Board (IRB) issued a media release, introducing new requirements for the stamping of employment contracts in Malaysia. This directive aligns with the phased implementation of the Stamp Duty Self-Assessment System (STSDS) under the 2025 Budget, and aims to enhance compliance with the Stamp Act 1949.

Key Changes Introduced by IRB

Mandatory Stamping for Employment Contracts

Starting January 1, 2026, all employment contracts between employers and employees must be stamped;
Contracts finalized before January 1, 2025, are exempt from stamp duty obligations;

Stamp Duty Rates & Compliance

Employment contracts must be stamped under Item 4, First Schedule of the Stamp Act 1949, with a fixed stamp duty of RM10;
Contracts executed between January 1, 2025 and December 31, 2025 must be stamped. Late stamping penalties will be remitted if completed before December 31, 2025;

Penalties for Late Stamping

From January 1, 2026, any delays in stamping employment contracts will result in penalties.

To summarise:

Employment Contract	Stamp Duty	Penalty Waiver
Before 1 January 2025	exempted	yes
1 January 2025 – 31 December 2025	applicable	yes (if stamped before 31 December 2025)
From 1 January 2026 onwards	applicable	no

Implications for Employers & Employees

This new requirement reinforces the importance of proper documentation in employment agreements. Employers must ensure that all contracts are stamped within the prescribed timeframe to avoid penalties.

Additionally, businesses should integrate stamp duty compliance into their HR and legal processes.