The Ultimate 2025 Guide to LHDN Stamp Duty on Employment Contracts in Malaysia
Since January 2025, the Inland Revenue Board of Malaysia (LHDN) has enforced a mandatory stamp duty requirement for employment contracts under the Stamp Act 1949. While this may sound like a technical update, it carries real implications for HR teams and employers across Malaysia.
What is Stamp Duty for Employment Contracts?
Stamp duty is a government-imposed tax on legal documents, including contracts of employment. It’s not a new law, stamp duty has existed for decades, but until now, many employment contracts have gone unstamped or overlooked.
With the latest enforcement by LHDN, this is no longer optional and carries real legal and financial consequences. Employers must stamp employment contracts within 30 days from the date they are signed.
Why Is This Suddenly Important?
LHDN is stepping up compliance and enforcement, especially for employment-related documents. If your HR department is still unaware of this requirement, it may risk penalties for each unstamped contract.
Unstamped contracts may also lose legal validity in certain disputes or audits. In other words, if an issue arises with an employee and the contract wasn’t stamped, your company may be at a disadvantage.
Who Should Handle the Stamping?
The responsibility of stamping employment contracts falls on the employer, as they typically initiate and retain these documents.
For HR departments, it’s highly recommended to include stamping as part of your onboarding checklist or employee document process.
When Must It Be Done?
Stamp duty must be paid within 30 days of signing the employment contract. The 30-day window starts from the date both parties (employer and employee) have signed the contract.
Late stamping can result in penalty charges, usually a percentage of the original duty, which increases the longer the delay.
How Much Is the Stamp Duty?
The stamp duty for employment contracts is RM10 per contract, as per LHDN’s standard rate. This applies regardless of salary level or job type.
It’s a small cost, but one that must be recorded and paid properly.
What Happens If You Don’t Follow the Requirement?
Failing to stamp your employment contracts can result in:
Penalty Charges
You may be required to pay a penalty up to RM100, or more, depending on how long the stamping is delayed. The longer you wait, the higher the penalty.
- Within 30 days of signing: No penalty, only pay the RM10 stamp duty.
- From 31 days to 3 months: Penalty of RM50 or 10% of the stamp duty (whichever is higher).
- More than 3 months: Penalty of RM100, or 20% of the stamp duty (whichever is higher).
Stamp duty must be paid within 14 days after the notice of assessment or within the period allowed.
Inadmissibility in Court
An unstamped employment contract cannot be used as evidence in legal disputes until it is stamped and the penalty paid. This puts employers at legal risk in cases involving terminations, salary disputes, or breaches of contract.
Compliance Risk During Audits
During company audits or inspections by LHDN or other regulators, unstamped contracts may raise red flags and result in compliance issues.
For companies that handle hundreds of hires per year, the total penalties can quickly add up if stamping is not part of the HR workflow.
How to Stamp Employment Contracts?
Online Stamping via STAMPS (LHDN Portal)
HR teams can register for a STAMPS account on the LHDN website to submit contracts digitally and make payment online, a more efficient option, especially for large companies.
On STAMPS website, employers can:
- Upload Employment Contract Copies
- Calculate Applicable Stamp Duty
- Pay Online And Receive A Digital Stamp Certificate
However, effective January 2026, STAMPS will transition to a new system on MyTax instead for seamless navigation.
Can I Apply For Stamp Employment Contracts in Bulk via STAMPS?
Yes, you can apply for bulk stamping by following these steps:
- Submit an application via the Feedback Form on the HASiL Official Portal or:
MyTax > Customer Feedback > e-Services / MyTax > STAMPS > Borang Permohonan > Penyeteman Berkelompok - You will be provided with a user manual and XML specifications for batch stamping.
- Submit an application via the Feedback Form on the HASiL Official Portal or:
What Should HR Do Now?
If you haven’t already, now is the time to:
- Review Your Document Processes: make sure all new employment contracts are stamped within 30 days.
- Educate Your HR Team: ensure everyone is aware of the stamping deadline and procedure.
- Consider Digital Stamping: register for LHDN’s STAMPS system to streamline the process.
- Backtrack Previous Contracts: if you’ve recently signed any contracts after 1 January 2025 that are still unstamped, stamp them immediately to reduce penalties.
While RM10 per contract may seem minor, non-compliance can lead to unnecessary legal risk and financial penalties.
You can avoid future issues and stay fully compliant with the Stamp Act with a proper HR workflow. Consider HRX integration to assist you in submitting any digital employment contracts to LHDN STAMPS system for official stamps.
