IPOH | The enforcement of stamp duty requirements for all employment contracts is an unnecessary financial and administrative burden impacting businesses, says an employers’ association.
Malaysian Industrial, Commercial and Service Employers Association (MICSEA) president YK Lai said while they commend the Inland Revenue Board’s (LHDN) efforts to strengthen compliance with the Stamp Duty Audit Framework effective from 1 January, the enforcement has caused issues for companies across all sectors.
“The growing concerns among employers include financial strain on companies, increased compliance costs, and the added workload on administrative operations, including human resources procedures.
“The increasing number of audits of stamp duties without any grace period or amnesty will likely impact companies with high turnover rates and small and medium enterprises (SMEs),” he said on Monday (May 19).
“Without clear guidance, these companies risk facing unavoidable penalties. Companies now face the added responsibility of ensuring all employment contracts are stamped at a cost of RM10 per copy, with a penalty of RM100 for non-compliance to ensure admissibility as evidence in court,” he added.
Lai said employers must also bear the cost of stamping past employment agreements with existing employees that were previously unstamped, increasing administrative expenses while managing tight operational budgets.
“This retrospective requirement offers little practical benefit, as many agreements are carried out without disputes or issues. Although employment contracts involving monthly wages below RM300 are exempt from this requirement, the exemption holds little practical relevance given that the current minimum wage in Malaysia is set at RM1,700,” he said.
Lai said MICSEA supports the Federation of Malaysian Manufacturers’ proposed solutions and recommendations on implementing new enforcement methods.
“The LHDN should grant a one-time amnesty on past unstamped documents. They also need to issue clear, sector-specific guidelines and introduce a six-to-12-month grace period,” he said.
“We urge the LHDN to cooperate with employers to ensure fair and balanced implementation,” he added.
Loh, Ivan. The Star. (19 May 2025). Stamp duty on employment contracts burdens businesses, says association. Retrieved from https://www.thestar.com.my/news/nation/2025/05/19/stamp-duty-on-employment-contracts-burdens-businesses-says-association
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