Mandatory Stamping of Employment Contracts Starting 2026 in Malaysia – What Employers Need to Know

The Inland Revenue Board (LHDN) has announced that all employment contracts must be stamped starting 1 January 2026, in accordance with the phased rollout of the Stamp Duty Self-Assessment System introduced under Budget 2025.

Key Points:

• Stamp Duty Requirement: Employment contracts fall under Item 4, First Schedule of the Stamp Act 1949, with a fixed stamp duty of RM10 per contract.
• Exemption: Contracts executed before 1 January 2025 are exempt from stamping.
• Grace Period for 2025 Contracts: Employment contracts finalised from 1 January to 31 December 2025 must still be stamped. However, no late stamping penalties will be imposed if stamping is completed by 31 December 2025.
• Full Enforcement from 2026: From 1 January 2026 onward, stamping is mandatory, and late stamping will incur penalties.

What Employers Should Do:
LHDN urges all employers to review and update their employment contracts to ensure full compliance. Employers should also ensure that all 2025 contracts are stamped before year-end and prepare to stamp all new contracts from 2026 onwards to avoid penalties.

Source: The Star