Latest news with #LHDN
Daily Express
2 days ago
- Business
- Daily Express
Yong slams DBKK over tax move
Published on: Monday, June 02, 2025 Published on: Mon, Jun 02, 2025 Text Size: Yong called on DBKK to adjust its mindset and stop aligning with Federal LHDN enforcement while the billions owed to this region remain unpaid. Kota Kinabalu: Former Chief Minister Datuk Seri Yong Teck Lee criticised City Hall (DBKK) for assisting Federal tax authorities in pursuing small traders while the State is denied billions in constitutional revenue. 'Why is DBKK playing Federal tax collector role?' Yong said in a statement, here, Sunday, condemning DBKK's collaboration with the Inland Revenue Board (LHDN) in targeting hawkers labelled as 'inactive' taxpayers. He said LHDN collected RM5.7 billion from Sabah in 2024 and targets RM6.2 billion for 2025, averaging RM6 billion annually. 'This excludes other tax revenues collected by Customs and other Federal agencies in Sabah. Despite these substantial collections, Sabah has not received its rightful 40 per cent constitutional share amounting to RM2.4 billion from the RM6 billion in tax revenues. Instead, Sabah receives only an interim payment of RM600 million, a figure plucked from nowhere,' he said. Yong said there is absolutely no reason for the Federal Government to delay making annual payments of at least RM2 billion to the Sabah Government. He said the targeted hawkers and micro businesses are not major tax evaders but small, informal traders already battling rising costs, subsidy cuts and declining purchasing power. 'Enforcing tax compliance in this climate, while RM2 billion in Sabah's share remains unreturned, only worsens economic fragility and damages local economic resilience,' he said. He called on DBKK to adjust its mindset and stop aligning with Federal LHDN enforcement while the billions owed to this region remain unpaid. 'DBKK should not contradict its role as a local government agency in uplifting livelihoods in Kota Kinabalu city,' he said. Yong said until the Federal Government honours the 40 per cent entitlement without further delay, tax enforcement in this region should be re-evaluated, paused if necessary and guided by consultation with the Sabah Government and Sabah business organisations. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Borneo Post
3 days ago
- Business
- Borneo Post
DBKK urged to stop acting as federal tax collector
Yong KOTA KINABALU (June 1): Kota Kinabalu City Hall (DBKK) should stop playing the role of federal tax collector to hunt down inactive taxpayers, said former chief minister Datuk Yong Teck Lee. He said these hawkers and micro businesses are not major tax evaders. They are small, informal traders already battling rising costs, subsidy cuts, and declining purchasing power. Yong said the CEO of Lembaga Hasil Dalam Negeri Malaysia (Inland Revenue Board) had announced that LHDN Sabah collected RM5.7 billion in taxes from Sabah in 2024. LHDN also targets tax revenues of RM6.2 billion for this year 2025. This means an average of RM6 billion in taxes from Sabah per year for 2024 and 2025 alone. 'It is not rocket science that 40% of that RM6 billion tax revenues is RM2.4 billion. This RM6 billion tax revenues excludes other tax revenues collected by the Customs Department and other federal agencies in Sabah. 'Yet Sabah has not received its rightful 40 per cent share of that revenue that Sabah is entitled to under the constitution,' he said in a statement on Sunday. Yong said there is absolutely no reason for the federal government to delay making annual payments of at least RM2 billion to the Sabah government. Instead, Sabah is paid an interim amount of only RM600 million, which is a figure plucked from nowhere. He said enforcing tax compliance in this climate, while RM2 billion in Sabah's share remains unreturned, only worsens economic fragility and damages local economic resilience. 'DBKK must adjust its mindset. It should stop aligning with federal LHDN enforcement while the billions owed to this region remain unpaid. DBKK should not contradicts its role as a local government agency in uplifting livelihoods in Kota Kinabalu city,' said Yong. He called on the federal government to honour the 40 per cent entitlement without further delay. Until then, tax enforcement in this region should be re-evaluated, paused if necessary, and guided by consultation with the Sabah government and Sabah business organisations.
BusinessToday
4 days ago
- Business
- BusinessToday
Postpone Implementation Of Stamp Duty On Employment Contracts
By Datuk Ir Lawrence Low The implementation of stamp duty on employment contracts by the Inland Revenue Board (LHDN) has caused concern among employers, particularly the small and medium enterprises (SMEs), whose businesses experience high staff turnover rates. While this stamp duty is stipulated and acknowledged under the Stamp Duty Act 1949, and is legally enforceable, we must also recognise that it is placing undue financial burden on businesses, especially SMEs, nationwide. This is further compounded by the recent increase in stamp duties penalties, which have been effective from Jan 1 this year. The sudden implementation, along with a lack of clear information, audit risks and high penalty rates, has placed unexpected pressure on employers, particularly within the SME sector. SMEs are now facing fines of up to 20% of the stamp duty owed or a minimum penalty of RM100 for each contract that is stamped late. With the cost of complying with this new stamp duty, along with the added risk of penalties for backdated employment contracts, a majority of SMEs are feeling the strain. This could cause disruption of business operations, hindering of staff employment and may even affect the salaries of existing employees. Therefore, MCA Economic and SME Affairs Committee urges the government to grant an amnesty period, allowing employers to voluntarily stamp past contracts without facing penalties. We also call on LHDN and the government to provide official guidelines and conduct dedicated briefings or workshops for the SME sector to ensure they are not unexpectedly penalised. Appropriate consideration should also be given to small and micro enterprises within these sectors with lower annual incomes. To add on to this, any future enforcement and implementations should be carried out with adequate notice and clear communication. We recognise the government's need to increase national revenue. However, we urge that this policy be implemented equitably, in a phased manner and with careful consideration of the challenges faced by Malaysians in reality, so as to not impose further strain on an already vulnerable sector. Related
The Star
4 days ago
- Business
- The Star
‘Stamp duty for job contracts another burden for businesses'
PETALING JAYA: Exempting employment contracts from stamp duty would ease unnecessary financial and administrative burdens, say industry players. They argue the added pressure is especially difficult for businesses, particularly small and medium enterprises (SMEs), already grappling with economic uncertainty and labour shortage. The appeal comes as the Inland Revenue Board (LHDN) begins actively enforcing stamp duty payments on employment-related documents under the Stamp Duty Audit Framework, effective Jan 1. Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said employment contracts should be specifically exempted from stamp duty, similar to what is practised in Singapore and Thailand. 'Employment contracts are a day-to-day matter. This is not a one-off legal document. 'Especially in Malaysia's current situation, where we are already struggling with talent outflow to Singapore and elsewhere, this is not the right time to add another burden,' he said when contacted yesterday. Koong added that the law, enacted in 1949, is 'very outdated' and should be amended before any enforcement framework is applied. While the legal requirement to stamp employment contracts has existed under the Stamp Act 1949, it had not been widely practised until now. Under the Act, employers must stamp all employment contracts – including full-time, part-time, fixed-term and short-term – within 30 days of execution, at a flat rate of RM10 per contract. However, failure to comply can now trigger a late penalty of up to RM100 per instrument, compounding costs for businesses with high staff turnover or a large workforce. 'The exemption would also remove unnecessary bureaucracy from HR departments, which already have more strategic tasks to focus on,' Koong said. In Singapore, even letters of appointment are considered non-dutiable, Koong added. 'We need that kind of business-friendly environment if we want to remain competitive and attract foreign direct investment.' Echoing this, national president of the Small and Medium Enterprises Association Datuk William Ng criticised the abrupt nature of the enforcement. 'There was insufficient notice, engagement or support from authorities. It feels more punitive than developmental,' he said, adding that the costs would go beyond the RM10 per document. 'The automatic late penalty of up to RM100 per contract means businesses with hundreds of employees, including those hired years ago, are facing a significant retrospective burden. 'HR teams must now comb through old contracts, stamp minor amendments and issue backdated documents. This is overwhelming for small teams,' he said. Ng proposed either exempting standard employment contracts or implementing a simplified compliance mechanism such as optional stamping unless required in court or a digital self-declaration model for SMEs. SME Association of Malaysia president Ding Hong Sing said stakeholders should have been consulted first. 'We are already dealing with so much – minimum wage increases, inflation, recruitment challenges. Now this? 'Even if it's a small amount, it adds up fast when you have many staffers. At least inform us before enforcing,' he said. MCA vice-president and Economic and SME Affairs Committee chairman Datuk Lawrence Low also called for an amnesty period to allow employers to stamp past contracts without penalty. He warned that the current approach could disrupt business operations, hinder hiring and even affect salaries. While the stamp duty is legally enforceable under the Act, Low said clearer guidelines and more communication are urgently needed.
New Straits Times
6 days ago
- Business
- New Straits Times
LHDN's stamping rule sparks debate
KUALA LUMPUR: The Inland Revenue Board's (LHDN) reported push to enforce the stamping of employment contracts has sparked a wider conversation on the balance between legal compliance and regulatory fairness. While industry experts agree that stamping employment contracts may be a necessary step to align with the Stamp Act 1949, many are calling for the measure to be applied transparently, consistently and with adequate transition measures. Federation of Malaysian Manufacturers recently claimed that there has been an intensified audit since the Stamp Duty Audit Framework was introduced on Jan 1 this year. While there is a legal provision under the Stamp Act 1949 requiring employment contracts to be stamped, it has yet to be widely practised. According to the Stamp Act 1949, employment contracts fall under chargeable instruments listed in the First Schedule. For an employment contract, stamping involves a RM10 fee per copy and must be stamped within 30 days of signing. Failure to do so could result in a penalty of up to RM100 per document. KPMG Malaysia head of tax Soh Lian Seng said this purportedly increased enforcement represents a shift from past practice and may feel sudden to some taxpayers who have operated in good faith under previous norms and practice. Soh said many businesses were not aware that such contracts were considered dutiable instruments, especially given the absence of consistent enforcement or clear prior guidance. "While this could be seen as a necessary step toward ensuring compliance with existing law, it is important that enforcement is applied transparently and consistently. "The retrospective application of penalties may raise concerns about fairness and could undermine trust in the system," he told Business Times. Ultimately, Soh said enforcement and reform efforts must strike a balance between revenue objectives and maintaining Malaysia's appeal as a business-friendly environment. "Sudden or unclear enforcement actions risk creating administrative burdens especially for SMEs, and may erode confidence in the regulatory landscape. "Ultimately, maintaining ease of doing business should remain a central policy focus, as adding administrative requirements without a clear legal basis could create unnecessary challenges for SMEs and growing businesses," he said. Soh urged that stamping requirements be applied prospectively from Jan 1, 2026, giving companies time to align their HR and administrative practices with the law. Meanwhile, the Small and Medium Enterprises Association of Malaysia (Samenta) president Datuk William Ng said the issue goes beyond legal interpretation but it is about operational feasibility. Ng said the sudden shift from a passive regime to active enforcement, coupled with retrospective audits and penalties, is perceived as punitive rather than developmental. "We support the principle of legal compliance and the government's move toward a more self-assessment-based tax regime. "However, changes of this nature require proper transitional arrangements, targeted education and policy clarity to avoid undue burden and confusion, especially when it concerns operational matters like HR documentation. "Many SMEs now face the daunting task of reviewing and potentially stamping hundreds of existing employment contracts, which is neither practical nor proportionate," he said. In addition to the RM10 stamp duty per contract, Ng said the automatic late penalty of up to RM100 per instrument, even if disclosure is voluntary, compounds the financial pressure. Furthermore, he said the requirement to stamp offer letters or confirmation letters within 30 days is impractical. "Many companies issue letters months in advance, and new hires may withdraw or defer their joining, making the process inefficient and wasteful," he noted. At a time when the nation is trying to attract investments, digital nomads, and high-value talent, Ng said this enforcement sends the wrong signal. "It's not just a matter of cost – it's the uncertainty, the complexity and the sense that rules can be changed and imposed retroactively without due consultation. "We urge LHDN to implement a grace period, provide clear written amnesty guidelines for voluntary disclosures, and develop a microenterprise-friendly compliance mechanism," he said. Echoing the views, the Malay Chambers of Commerce (MCC) said such enforcement affected micro traders and small-scale industries as it outlines the rights and responsibilities of audit officers and duty payors, the types of duties and penalties. Its Malay Economy Action Council chairman Norsyahrin Hamidon said the measure was "rushed through, without any thorough comprehensive studies or taking into account workers' plight". Norsyahrin, nevertheless, said MCC agreed with LHDN's approach to educate and encourage compliance to ensure the Act is followed and reduce the burden on penalties or punishment. "However, we hope the education phase reaches the grassroots through the involvement of the chambers before it is enforced and is not just an announcement. "The issues involving cooling off period, waiver mechanism, penalties and punishments need to be clarified as it is confusing. "Among others, the waiver on stamp duty for workers with a monthly salary of RM300 and below is outdated and does not reflect the present salary structure and the labour market," he said. Norsyahrin said MCC was looking for an amicable solution and would like to discuss with relevant agencies, including LHDN and the Finance Ministry to share the concern of Bumiputra traders and to receive a detailed clarification. He said MCC is willing to work with the government and share its concerns with the National Chambers of Commerce and Industry Malaysia, with the view that more time should be given for more companies to be exposed. "At the same time, we urge the government to review the Stamp Duty on Contract Workers and postpone the implementation until the Stamp Duty Act 1949 is reviewed again, " he added. Business Times had reached out to LHDN for clarification on the policy shift, retrospective enforcement, and possible transitional relief measures, but no official response was received as of press time.
