Quick answer: From 1 January 2026, an employment contract in Malaysia is generally subject to the Stamp Act 1949. A contract with total monthly wages, including allowances, of not more than RM3,000 is exempt from stamp duty, but it should still be submitted to LHDN for exemption endorsement. A taxable employment contract is generally charged RM10 for each original instrument and should be stamped within 30 days.
2026 update: Stamp-duty applications now fall under Phase 1 of the Self-Assessment Stamp Duty System (STSDS) through MyTax/e-Duti Setem. The Stamp Duty Voluntary Disclosure Programme (PKPS) has also been extended to 31 December 2026 for eligible instruments executed from 1 January 2023 to 31 December 2025.
What is employment contract stamp duty in Malaysia?
Stamp duty is imposed on written instruments rather than on the underlying transaction. An employment contract, signed offer letter or other written document that creates an employer-employee relationship may be a chargeable instrument under the First Schedule to the Stamp Act 1949.
LHDN assesses the substance of the document, not merely its title. If an offer letter is the only binding document between the employer and employee, it may be treated as the employment contract for stamp-duty purposes.
2026 employment contract stamp-duty rules
| Issue | Latest position |
|---|---|
| Monthly wages not exceeding RM3,000 | Exempt from stamp duty for employment contracts executed from 1 January 2026. LHDN guidance indicates that the threshold includes allowances stated in the contract. The instrument should still be submitted for exemption endorsement. |
| Monthly wages above RM3,000 | Generally subject to RM10 stamp duty for each original employment contract under Item 4 of the First Schedule. |
| New or renewed contract | Each new agreement is a separate instrument and should be assessed and stamped or endorsed accordingly. |
| Submission system | Use MyTax/e-Duti Setem under Phase 1 of STSDS, which covers General Stamping from 1 January 2026. |
| Record retention | Keep the stamped instrument, stamp certificate and related records for seven years from the date the duty is paid. |
Which employment documents may require stamping?
The requirement can extend beyond a full employment agreement. Employers should review:
- signed offer letters that form the binding employment agreement;
- temporary, part-time, fixed-term and internship agreements where an employer-employee relationship exists;
- renewed employment contracts;
- binding addenda or amendments covering salary, benefits or other obligations; and
- agreements connected with employer-sponsored study or training.
A genuine contract for services, where no employer-employee relationship exists, may be assessed under a different item of the First Schedule. The document’s actual terms should therefore be reviewed before selecting the instrument category.
Stamping deadline and late-stamping penalties
An employment contract should generally be stamped:
- within 30 days from execution if signed in Malaysia; or
- within 30 days after it is first received in Malaysia if executed outside Malaysia.
| Delay | Penalty |
|---|---|
| Stamped within three months after the stamping deadline | RM50 or 10% of the deficient duty, whichever is higher |
| Stamped more than three months after the stamping deadline | RM100 or 20% of the deficient duty, whichever is higher |
These penalty rates have applied since 1 January 2025. Employers should not delay merely because the underlying duty is only RM10.
How are older employment contracts treated?
| Contract execution date | Current treatment |
|---|---|
| Before 1 January 2025 | Employment contracts qualify for duty exemption and remission of late-stamping penalties under LHDN’s announced treatment. They may still be submitted for assessment and exemption endorsement. |
| 1 January to 31 December 2025 | Duty remains payable where applicable. Under PKPS Duti Setem 2026, eligible instruments executed from 2023 to 2025 can receive an automatic penalty exemption if stamping and payment are completed by 31 December 2026. |
| From 1 January 2026 | The RM3,000 wage threshold applies. Instruments above the threshold are generally subject to RM10 duty, and normal late-stamping penalties apply if the statutory deadline is missed. |
PKPS Duti Setem 2026: penalty-waiver opportunity
LHDN extended the Stamp Duty Voluntary Disclosure Programme to 31 December 2026. The programme applies to eligible instruments executed from 1 January 2023 to 31 December 2025 that have not been properly stamped or paid.
- Stamping and payment must be completed by 31 December 2026.
- No separate penalty appeal is required for an eligible instrument; the penalty exemption is applied automatically when the duty is paid within the programme period.
- The programme does not apply to fraud cases.
- Instruments stamped under the programme will not be audited, although other unstamped instruments may still be reviewed.
Employers with a large backlog should begin early so that the assessment, payment and certificate process can be completed before the deadline.
How to stamp an employment contract through MyTax
- Confirm the correct instrument category and whether the RM3,000 exemption applies.
- Ensure the relevant parties have Tax Identification Numbers (TINs).
- Log in to MyTax and access e-Duti Setem.
- Select the General Stamping category and the appropriate employment-contract instrument type.
- Complete the Stamp Duty Return Form (BNDS), upload the signed instrument and self-assess the duty.
- Make payment within the applicable deadline.
- Download the stamp certificate and keep it with the original contract.
- Retain the instrument and supporting records for seven years.
Employer compliance checklist
- Prepare an inventory of employment contracts, signed offer letters, renewals and binding addenda.
- Separate documents by execution date: before 2025, during 2025 and from 2026 onward.
- Identify 2026 contracts with total monthly wages and allowances not exceeding RM3,000.
- Submit exempt instruments for endorsement instead of assuming no action is required.
- Use the PKPS deadline for eligible 2023-2025 instruments.
- Build a 30-day stamping control into the HR onboarding and contract-renewal process.
- Keep the stamp certificate together with each contract and maintain a central compliance register.
How HTL can assist employers
HTL & Co can help businesses review their employment-contract population, organise supporting documents and establish a practical stamping and payroll-compliance process. Learn more about our payroll services in Johor Bahru and LHDN tax audit support.
Official references
- LHDN: Guideline on Stamp Duty for Instruments under the First Schedule, issued 30 June 2026
- LHDN: Self-Assessment Stamp Duty System (STSDS)
- LHDN: Stamp Duty Frequently Asked Questions
- LHDN media release: PKPS Stamp Duty extended to 31 December 2026
This article provides general information based on official guidance available at the date of update. Stamp-duty treatment depends on the wording and facts of each instrument and should not be treated as legal advice.
