Stamp Duty on Employment Contracts in Malaysia: 2026 Update
Updated: 11 minutes ago
Stamp duty on employment contracts has been getting more attention from Malaysian employers since 2025. With further changes taking effect in 2026, it is important to know which contracts need to be stamped, which are exempt, and what employers should do if they still have older unstamped contracts.
Here is a practical guide to the current rules for employment contract stamp duty in Malaysia.
What Is Stamp Duty on an Employment Contract?
Stamp duty is imposed on instruments, meaning written documents, rather than on the transaction itself. An employment contract that creates an employer-employee relationship is generally treated as a stampable instrument under the Stamp Act 1949.
Where stamping is required, a contract signed in Malaysia generally needs to be stamped within 30 days from the date it is signed. If it is signed outside Malaysia, the 30-day period generally runs from the date the document is first received in Malaysia.
For employment contracts executed from 1 January 2026, an important exemption applies where the employee's monthly wages do not exceed RM3,000.
Which Employment Contracts Need Stamp Duty?
The treatment now depends mainly on when the contract was executed and, for contracts from 2026 onwards, the employee's monthly wages.
Contracts Executed Before 1 January 2025
Employment contracts executed before 1 January 2025 are exempt from stamp duty, and the relevant late-stamping penalties are remitted.
HASiL's current FAQ states that these exempt contracts may be submitted for assessment and endorsement if the employer wants to obtain a stamp duty exemption certificate. This is different from saying every pre-2025 contract must now be submitted for endorsement.
Contracts Executed From 1 January to 31 December 2025
Employment contracts executed during 2025 were subject to RM10 stamp duty for each original contract. The special penalty remission applied only where the contract was stamped on or before 31 December 2025.
If you discover an unstamped 2025 employment contract now, late-stamping penalties may apply. Employers should arrange for the outstanding contract to be stamped rather than relying on the expired 2025 penalty remission.
Contracts Executed From 1 January 2026
From 1 January 2026, the stamp duty treatment depends on the employee's monthly wages.
Monthly wages of RM3,000 or below: exempt from stamp duty. Under HASiL's clarification issued on 7 August 2026, these employment contracts do not need to be stamped or submitted for endorsement.
Monthly wages above RM3,000: the principal employment contract is generally subject to RM10 stamp duty and should be stamped within the applicable timeframe.
The RM3,000 threshold includes allowances provided by the employer, based on HASiL's published 2026 guidance. Employers should therefore look at the employee's applicable monthly wages and allowances when checking whether the exemption applies.
Do Supporting Employment Documents Need to Be Stamped?
HASiL clarified on 7 August 2026 that where an employee's monthly wages exceed RM3,000, the principal employment contract containing the terms and conditions of employment needs to be stamped and endorsed.
Supporting or ancillary documents relating to the same employment arrangement generally do not need to be separately stamped or endorsed. This is useful for HR teams managing later employment-related documents after the main contract has already been executed.
However, stamp duty is determined based on the contents of a document, not simply its title. If a later document creates a new agreement rather than merely supporting the existing employment arrangement, its treatment may be different.
How Much Is the Stamp Duty?
Where an employment contract is subject to stamp duty, the applicable duty is generally RM10 for each original employment contract under Item 4 of the First Schedule to the Stamp Act 1949.
Contracts executed from 1 January 2026 with monthly wages of RM3,000 or below are exempt from this duty and do not require stamping or endorsement.
What Happens If an Employment Contract Is Stamped Late?
If a contract that requires stamping is submitted after the deadline, a late-stamping penalty may apply.
Stamped within 3 months after the deadline: RM50 or 10% of the deficient duty, whichever is higher.
Stamped more than 3 months after the deadline: RM100 or 20% of the deficient duty, whichever is higher.
The special penalty remission previously available for employment contracts executed during 2025 has ended. Employers reviewing older contracts should therefore check whether any outstanding duty and penalties now apply.
How to Stamp an Employment Contract
From 1 January 2026, stamp duty services are handled through e-Duti Setem via the MyTax portal, following the introduction of the Stamp Duty Self-Assessment System (STSDS).
If your employment contract needs to be stamped, here is a simple overview of the process:
Make sure the relevant parties have a valid Tax Identification Number (TIN).
Log in to MyTax and access the e-Duti Setem service.
Upload the employment contract.
Complete the required STSDS information and submit the relevant form.
Self-assess the stamp duty payable.
Make payment within the required timeframe.
Keep the stamped contract and relevant records for 7 years from the date the duty is paid.
STSDS is being introduced in phases based on the type of instrument. Employers should check the latest HASiL requirements when submitting documents, particularly where the nature of the document is unclear.
What Should Employers Do Now?
If you have not reviewed your employment contracts recently, this is a good time to do it.
Separate contracts by execution date: before 2025, during 2025, and from 2026 onwards.
For contracts executed from 2026, check whether the employee's monthly wages exceed RM3,000.
Do not submit RM3,000-and-below 2026 employment contracts for endorsement simply because they are exempt. Under HASiL's latest clarification, no stamping or endorsement is required.
For contracts above RM3,000, make sure the principal employment contract has been stamped where required.
Review any unstamped 2025 contracts, as the special penalty remission ended on 31 December 2025.
Keep your stamping records organised and retain the relevant STSDS records for 7 years.
For employers with a large workforce, reviewing contracts in batches can make the process easier to manage. Start with current employees, identify contracts that still require action, and keep a clear record of what has been stamped or exempted.
Frequently Asked Questions
Do employment contracts with monthly wages of RM3,000 or below need to be stamped?
No. For employment contracts executed from 1 January 2026, contracts where monthly wages do not exceed RM3,000 are exempt from stamp duty and, under HASiL's 7 August 2026 clarification, do not need to be stamped or endorsed.
Does a salary increment letter need to be stamped?
Generally, a supporting document relating to the same existing employment arrangement does not need to be separately stamped or endorsed. However, if the document creates a new agreement or operates as a new principal employment contract, its stamp duty treatment may be different. HASiL assesses an instrument based on its contents, not simply its title.
What if the employment contract was signed before 2025?
Employment contracts executed before 1 January 2025 are exempt from stamp duty, with the relevant late-stamping penalties remitted. HASiL's current FAQ says these contracts may be submitted for assessment and endorsement if an employer wants an exemption certificate.
What if I still have an unstamped 2025 contract?
The special penalty remission for 2025 employment contracts ended on 31 December 2025. If a contract that should have been stamped remains outstanding, late-stamping penalties may now apply.
Where do employers stamp employment contracts now?
From 1 January 2026, stamping processes are handled through e-Duti Setem via MyTax. Employers should follow the current STSDS process and the latest HASiL guidance.
Need Help Managing HR Compliance?
Employment contract administration is only one part of staying compliant as an employer. If you need support managing HR administration, payroll or employment documentation, Synergy Outsourcing can help you keep the process organised and up to date.
