5 days ago
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
