Kuala Lumpur: The Inland Revenue Board (IRB) has announced that effective January 1, 2026, all employment contracts between employers and employees must be stamped. This move aligns with the phased implementation of the Stamp Duty Self-Assessment System (STSDS) as outlined in the 2025 Budget.

According to BERNAMA News Agency, the IRB has already initiated comprehensive stamp duty audit activities nationwide since January, following the issuance of the Stamp Duty Audit Framework (RKADS). This initiative has revealed that many employment contract documents have not been stamped as required under the Stamp Act 1949, where the stamp duty is set at RM10.

To ease the burden on employers, the Ministry of Finance has decided to exempt employment contracts executed before January 1, 2025, from stamp duty obligations. This requirement is enforced based on the powers granted to the Minister of Finance under subsection 80(1A) of the Stamp Act 1949 and the authority to remit late stamping penalties provided to the Collector of Stamp Duty under subsection 47A(2) of the same act.

Employment contracts finalized between January 1, 2025, and December 31, 2025, will be subject to stamp duty. However, a remission of late stamping penalties will be granted if the contracts are stamped by December 31, 2025. This relief is exercised under the powers of the Collector of Stamp Duty under subsection 47A(2) of the Stamp Act 1949.

The IRB has stated that starting January 1, 2026, any delays in stamping employment contracts finalized from that date onwards will result in penalties. In response, the IRB urges all employers to review and update their existing and upcoming employment contracts to ensure full compliance with the stamping requirements as stipulated under the Stamp Act 1949.