Malaysia: Stamp duty exemption for employment contracts under MYR 3,000

14 Oct 2025    2 minute read
Employment Stamp Duty

In brief

The requirement to stamp employment contracts in Malaysia has gained attention as employers prepare for the end of the penalty grace period on 31 December 2025. Our earlier updates on this topic may be found here and here.

In a new development, the government has proposed raising the stamp duty exemption threshold to cover employment contracts with monthly wages below MYR 3,000.

Contents

Proposed exemption for employment contracts below MYR 3,000

During the Malaysian Budget 2026 announcement on 10 October 2025, the Prime Minister and Finance Minister, Dato' Seri Anwar Ibrahim, proposed to exempt employment contracts from stamp duty where monthly wages do not exceed MYR 3,000. The proposed exemption is anticipated to be effective 1 January 2026 (based on the budget announcement).

Currently, the Malaysian Stamp Act 1949 only exempts contracts with wages that do not exceed MYR 300 from stamping, a threshold widely seen as outdated given Malaysia's minimum wage levels (currently at MYR 1,700 per month).

The proposal marks a welcome update to align stamp duty requirements with current wage realities. We will provide further updates once the proposed exemption comes into force.

Refresher: 2025 compliance measures

Stamp duty enforcement in relation to employment contracts has historically been minimal. However, with the Stamp Duty Audit Framework in effect from 1 January 2025 and the self-assessment regime officially starting 1 January 2026, the Inland Revenue Board (IRB) is stepping up audits.

To ease the transition, the IRB announced the following on 6 June 2025:

  • Employment contracts signed before 1 January 2025: Fully exempt from stamp duty and late penalties
  • Employment contracts signed between 1 January 2025 until 31 December 2025: Subject to stamp duty (of MYR 10), but late stamping penalties will be waived if stamped by 31 December 2025
  • Employment contracts signed from 1 January 2026 onwards: Subject to stamp duty and late penalties will apply if not stamped on time

Employers are reminded to continue reviewing their employment contracts and ensure timely stamping before 31 December 2025, as the official implementation of the self-assessment regime approaches.

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Grace Chai, Associate, has contributed to this legal update.

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