1.0     Introduction

Stamp duty is governed by Stamp Act 1949. It imposes on chargeable instruments, such as contracts, agreement, deed of assignment and others [First Schedule, Stamp Act 1949].

STAMP

The instrument must be written, signed by both parties with stated consideration.

2.0     Contract

Employment contracts signed between employer and employees, formed the master and servant relationship with the agreed remuneration package is subject to stamp duty. [Item 4, First Schedule]

3.0     Stamp duty payable

The stamp duty on employment contract is fixed at RM10, irrespective of the remuneration payable.

It applies to a new employment contract signed on/after 1.1.2025.

4.0     Exemption

The employment threshold value on stamp duty is set at RM3,000 monthly, which includes allowances and benefits provided by the employer. This takes effect from 1.1.2026.

For employment contract with monthly remuneration ≤ RM3,000, the employment contract remains required to be submitted for endorsement on stamp duty exemption, using the MyTax on e-Stamp Duty despite stamp duty is exempted.

4.1     Blanket exemption

Employment contract signed prior to 1.1.2025, irrespective of the monthly remuneration is concessionary granted blanket exemption on stamp duty [s 80(1A)].

These contracts are required to submit to IRB for endorsement, to obtain the certificate of stamp duty exemption. The IRB does not accept group stamping with a list of employees without individual employment contract.

5.0     Stamp duty on execution

Stamp duty crystalizes at the time of execution of employment contract. The subsequent event occurrence does not relieve the stamp duty obligation.

The employment contract once executed is required to submit for endorsement on stamp duty exemption, despite the employees may have resigned, retired or death.

Note:

Employment contract with monthly remuneration ≤ RM3,000 is required to submit to e-Stamp Duty on endorsement for stamp duty exemption, despite no stamp duty payable.

6.0     Consultant

Director receiving director fees from the company is exercised a profession. Director is not an employee. The contract for service is subject to stamp duty at 0.5% [Item 22(1)(a), First Schedule].

However, it is eligible for stamp duty remission in excess of 0.1%.

[Stamp Duty (Remission) Order 2021, PU (A) 428/2021]

7.0     Conclusion

The imposition of stamp duty is strictly based on chargeable instrument and requires to be stamped with the IRB system, either with stamp duty payable or endorsement for exemption. Non-compliance would attract penalty equivalent to late stamping penalty of RM100 or 20% of the deficient stamp duty.