Starting 1 January 2025, it will be mandatory for all employment contracts in Malaysia to be stamped in accordance with Section 47A of the Stamp Act 1949. Failure to adhere to this requirement may result in penalties.
Understanding Contract Stamping: Contract stamping is the process of officially endorsing documents, such as employment contracts, with the Inland Revenue Board (LHDN). This endorsement provides legal recognition and enforceability to the document. Although this requirement has been part of the Stamp Act 1949 for some time, its consistent practice by many companies has been limited. However, LHDN has now confirmed strict enforcement, making preparation crucial.
Cost Implications: The stamp duty is a flat rate of RM10 per contract copy. No additional costs will be incurred unless the contract includes other items that are subject to stamp duty, such as staff loans or tenancy clauses.
What SMEs Need to Do for Compliance: To comply with this new and enforced requirement, your company will need to submit contracts through the LHDN’s dedicated online portal, STAMPS.
Consider the following:
- Does your company currently possess a STAMPS login?
- If not, Intune Outsourcing is ready to assist you. We can help you set up your STAMPS account and manage the entire stamping process on your behalf, ensuring a smooth transition to compliance.
Why Immediate Action is Recommended: Penalties for non-compliance will be actively applied starting 1 January 2025. As your trusted HR outsourcing partner, Intune Outsourcing strongly advises that you address this requirement in advance. Proactive stamping will help you avoid potential legal issues, ensure the validity of your employment agreements, and prevent any delays in your employment processing procedures.
