Latest news with #StampAct1949
Borneo Post
a day ago
- Business
- Borneo Post
Govt urged to reconsider mandatory stamp duty on employment contracts
Tan KOTA KINABALU (June 3): The Sabah Association of Professional Accountants (SAPA) expresses concern over the recent directive by the Inland Revenue Board (LHDN Malaysia) requiring all employment contracts to be stamped in accordance with the Stamp Act 1949. 'While we recognise the importance of legal compliance and revenue collection, SAPA calls on the government to urgently consider exemptions or threshold limits, especially for small and medium enterprises (SMEs),' said its president, Datuk Tan Kok Liang. He said this policy places additional administrative and financial burdens on businesses — particularly in Sabah, where operating costs are already higher due to logistics, geographic challenges, and a more constrained labour market. 'The move to enforce stamp duty on all employment contracts, regardless of salary level or business size, risks creating unintended pressure on SMEs,' he said in a statement on Tuesday. The key concerns are as follows: Disproportionate impact on SMEs: Unlike large corporations, small businesses operate on tight margins. A blanket enforcement adds to compliance costs without proportional benefit. Administrative Burden: The need to process, submit and pay for stamp duty on every employment contract creates extra red tape, especially for businesses with high staff turnover or seasonal employment. Impact on formalised contracts: Over-regulation in the hiring process may discourage small businesses from formalising contracts thus placing employees in rural and semi-urban Sabah into vulnerable position. SAPA's recommendations: Introduce a Threshold Limit: Exempt employment contracts for positions with monthly salaries below a reasonable threshold (e.g. RM4,000), in line with many other tax relief measures. Provide Full or Partial Exemption for Micro and Small Enterprises: Particularly those with annual revenue below RM500,000 or fewer than 10 employees. Phase Implementation with Outreach: This includes sufficient time to meet up with the new requirements and a new implementation date of 1 January 2026 and approach with education and support will ease compliance. SAPA strongly urges the Ministry of Finance and the Inland Revenue Board to engage with industry stakeholders in Sabah and other less-developed states before blanket implementation. Public policy must consider regional disparities, business realities, and the broader objective of stimulating employment and economic growth. 'We are confident that with constructive dialogue, a balanced policy solution can be achieved that protects both the interests of the government and the resilience of our local business community,' said Tan. He added the Stamp Act must be modernised to reflect current practical realities rather than remaining rooted in outdated and regressive approaches. While its original intent and purpose — to provide legal certainty and protect the interests of contracting parties — remain important, these objectives must be interpreted in the proper context. The Act should not be used in a manner that causes undue inconvenience or serves merely as a revenue-generating tool. In the case of employment contracts, for instance, such agreements have long been executed and honored by both employers and employees without issue. This consistent practice demonstrates mutual respect and understanding of contractual obligations, regardless of whether the documents were stamped. Insisting on strict adherence to outdated requirements, especially where there is no dispute between parties, undermines the spirit of the law and creates unnecessary administrative burdens, he pointed out. 'It is time for a balanced approach — one that preserves the protective function of the Stamp Act but updates its application to align with modern business practices and realities' he said. Previous Article UMS water supply sufficient, says Shahelmey
The Star
a day ago
- Business
- The Star
Sabah accountants urge rethink on stamp duty for employment contracts
KOTA KINABALU: The Sabah Association of Professional Accountants (SAPA) is urging the federal government to reconsider the blanket enforcement of stamp duty on all employment contracts. The group warns that the policy could burden small and medium-sized enterprises (SMEs), particularly in Sabah. While acknowledging the legal and fiscal rationale behind the Inland Revenue Board's directive, SAPA president Datuk Tan Kok Liang stated that the policy must consider the realities of doing business in less-developed regions like Sabah. "This requirement places additional administrative and financial burdens on employers, especially SMEs operating under constrained resources and geographical challenges," he said on Tuesday (June 3). He added that SAPA calls for a more balanced approach by exempting contracts with monthly salaries below RM4,000, offering exemptions to micro and small enterprises, and phasing in the policy with an implementation date no earlier than January 1 next year, alongside stakeholder engagement and educational outreach. Tan noted that the directive risks discouraging small businesses from formalising employment contracts due to overregulation and red tape. "This could inadvertently leave workers in rural or semi-urban Sabah vulnerable and without formal employment protection," he said. He added that while the Stamp Act 1949 was enacted for legal clarity and contractual certainty, its enforcement must evolve. "In practice, employment contracts have been respected by both employers and employees, with or without a stamp. Strict enforcement based on outdated provisions is counterproductive," he said. Tan then said that SAPA believes reforming the Stamp Act to reflect modern business practices is essential to prevent it from becoming solely a revenue collection tool. "We remain confident that through constructive dialogue, a balanced policy solution can be achieved, one that upholds the law while safeguarding local businesses and promoting employment," said Tan.
The Sun
3 days ago
- Business
- The Sun
Tax Matters – Should contracts related to employment be stamped?
THERE is significant discussion in the media and in various publications on whether contracts related to employment should be stamped. This has arisen because the Inland Revenue Board (IRB) has recently been visiting taxpayers and advising them that their contracts of employment and other documents relating to employment should be stamped, and late stamping penalties will be applicable. The visits to taxpayers were conducted under the new Stamp Duty Audit Framework issued on Jan 1, 2025. To add weight to the current treatment, the Malaysian Industrial, Commercial and Service Employers Association (Micsea) has issued a statement mentioning that it has agreed with the IRB a concession that the penalty will be waived for all employment contracts stamped on or before Dec 31, 2025. The self-assessment system for stamp duty purposes will only be applicable from Jan 1, 2026, which allows the IRB to conduct audits and make additional assessments for any shortfalls for up to five years after the duty is paid or would have been paid. As to whether the IRB can go back prior to Jan 1, 2026 (i.e. before the self-assessment kicks in) is debatable. The normal understanding is: You should not apply the law retrospectively; and secondly the issue of whether the IRB has the right to impose stamp duty will only be confined to instruments which are mandatorily required to be stamped. At the moment, the assessment of stamp duty is on an official system where the taxpayer sends the document for adjudication and seeks an assessment. Although there is an audit framework applicable from Jan 1, 2025 which allows the IRB to visit taxpayers, the findings from the audit cannot invoke additional taxes unless there is a mandatory requirement in the legislation for the instruments to be stamped. There is significant discussion and publications by learned parties who have expressed the view that all written instruments must be stamped. The justification for their position is not clear as there is difficulty in finding the necessary legislation to support their position. When it comes to employment contracts, Micsea states in its publication that employment contract, letter of transfer (where it will be perceived as a new employment) and fixed term contracts (including each contract issued after the expiration date) should be stamped. Promotion and bonus letters, annual increment letters, letter of transfer within the company which does not amount to a new employment and secondment letters which do not amount to a new employment contract are 'exempted' from stamping. This appears to be their understanding with the IRB. All the above written documents are 'instruments' as defined under Section 2 of the Stamp Act 1949. Where is the authority to dissect the above instruments between subject to stamping or exempted from stamping? This position does not seem to resonate with the law. There is no specific provision in the Stamp Act 1949 that states that employment contracts are required to be stamped other than the fact that employment contract is an 'instrument' under the Stamp Act 1949. Based on this analysis, up to Dec 31, 2025, before the self-assessment system kicks in, there does not seem to be a need to stamp employment contracts and contracts related to employment. To allow businesses to carry on without this ambiguity, it will be best if the visits by the IRB are clearly done with the intention of educating and preparing taxpayers for 2026 to get them ready for the self-assessment system. In such visits, taxpayers should have the benefit of our esteemed IRB officials who will be up-to-date technically and knowledgeable on the workings of the stamp duty system to help taxpayers comply with their responsibilities.
The Star
4 days ago
- Business
- The Star
Stop the blame game, focus on Ops Gasak enforcement issue, Dr Wee tells ministry
JOHOR BARU: The Domestic Trade and Cost of Living Ministry should focus on the real issue regarding the enforcement of Ops Gasak instead of blaming the previous government, says Datuk Seri Dr Wee Ka Siong. The MCA president said this in response to its Minister Datuk Armizan Mohd Ali, who reportedly claimed that the law behind the enforcement, where eateries are required to use 14kg commercial liquefied petroleum gas (LPG) cylinders, was passed when Dr Wee was in the Cabinet. 'The core issue is not about who passed the amendments to the Control of Supplies Regulations in 2021, but how it is being enforced today. 'Yes, the amendment in 2021 was passed while I was part of the Cabinet. "However, up until 2024, there were no large-scale enforcement operations like Ops Gasak that aggressively targeted night markets, stalls, small vendors and food hawkers as it has been done since May 2025,' he said in a statement on Sunday (June 1). Dr Wee added that even the previous Pakatan Harapan government had backtracked on its plan to enforce the law after considering its consequences. 'The Pakatan Harapan 1.0 government in 2019 also attempted to enforce the use of commercial liquefied petroleum gas (LPG) in restaurants and eateries, but they halted the move after realising the burden it placed on the public. 'The existence of a law does not mean enforcement must be harsh or sudden. "Many laws have existed for years, but enforcement is often carried out based on the government's discretion and necessity,' he said. Dr Wee cited the Stamp Act 1949 as an example of such a law, saying that while it has been in force for decades, widespread enforcement on employment agreement stamping only ramped up in 2025. 'Likewise, Ops Gasak, this large-scale enforcement is an administrative decision made by the Madani government in 2025, not a directive from the Cabinet when the 2021 amendment was passed,' he said. Dr Wee, who is also Ayer Hitam MP, said the enforcement burdens small traders at a time when the public is already under pressure. 'The Sales and Service Tax (SST) hike and the expansion of its scope will begin in June, electricity tariffs will increase in July, RON95 subsidies are being retargeted, and the minimum wage has increased to RM1,700. 'All these add to the operating costs of small traders, and Ops Gasak, which targets small traders using only 12kg and 14kg LPG cylinders, further worsens the pressure on the rakyat,' he said. He added that a PETRONAS directive, which quoted the Ministry many times, revealed the real impact of Ops Gasak on small traders. 'In a letter dated April 30, 2025, PETRONAS instructed all gas distributors to stop selling subsidised LPG (12kg and 14kg cylinders) to all commercial premises, including restaurants, food stalls and warung. 'This directive has directly caused confusion, anxiety and hardship to thousands of small traders who now fear enforcement action even though they have only ever used small cylinders. 'On the ground, we continue to see many videos and complaints of inspections on small traders, which contradict the narrative that only large industries are being targeted,' he said. Dr Wee added that Malaysians deserve to benefit from being among the largest gas producers in the world and that LPG subsidies are also not a major financial burden to the country. As of May 1, eateries, including hawker stalls, will be required to use the 14kg purple-coloured commercial gas cylinders priced at RM70.
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.
