Latest news with #StampDutyAuditFramework
New Straits Times
06-06-2025
- Business
- New Straits Times
IRB makes stamping of job contracts mandatory from 2026
PUTRAJAYA: The Inland Revenue Board (IRB) has announced that all employment contracts between employers and employees must be stamped from Jan 1, 2026. This directive follows the phased implementation of the Stamp Duty Self-Assessment System (STSDS), as outlined in the 2025 Budget. In a statement today, the IRB said it had begun comprehensive stamp duty audit activities nationwide since January, following the issuance of the Stamp Duty Audit Framework (RKADS). "Through these audit activities and compliance operations, one of the key findings is that many employment contracts have not been stamped as required under Item 4, First Schedule of the Stamp Act 1949, which stipulates a stamp duty of RM10," the IRB said. To ease the burden on employers, the Ministry of Finance has agreed to exempt employment contracts executed before Jan 1, 2025, from stamp duty. This exemption is granted under the powers of the Finance Minister in subsection 80(1A) of the Stamp Act 1949, while the authority to remit late-stamping penalties falls under subsection 47A(2), which empowers the Collector of Stamp Duty. Employment contracts finalised between Jan 1 and Dec 31, 2025, will still be subject to stamp duty. However, the IRB will grant a remission of late-stamping penalties, provided the contracts are stamped by Dec 31, 2025. From Jan 1, 2026, all employment contracts must be stamped promptly, as any delays will result in penalties. In light of these developments, the IRB has urged employers to review and update existing and upcoming contracts to ensure full compliance with the Stamp Act 1949.
Borneo Post
06-06-2025
- Business
- Borneo Post
IRB: Compulsory for employment contracts to be stamped effective next year
IRB said it has already begun comprehensive stamp duty audit activities nationwide since January this year, following the issuance of the Stamp Duty Audit Framework (RKADS). – Bernama photo PUTRAJAYA (June 6): The Inland Revenue Board (IRB) has announced that all employment contracts between employers and employees must be stamped starting Jan 1, 2026. This directive is in line with the phased implementation of the Stamp Duty Self-Assessment System (STSDS) as outlined in the 2025 Budget. In a statement today, the IRB said it has already begun comprehensive stamp duty audit activities nationwide since January this year, following the issuance of the Stamp Duty Audit Framework (RKADS). 'Through the audit activities and compliance operations, one of the key findings has been that many employment contract documents between employers and employees have not been stamped as required under Item 4, First Schedule of the Stamp Act 1949, where the stamp duty is set at RM10,' according to the statement. It said to ease the burden on employers, the Ministry of Finance has agreed to exempt employment contracts executed before Jan 1, 2025, from stamp duty obligations. This requirement is enforced based on the powers granted to the Minister of Finance under subsection 80(1A) of the Stamp Act 1949 and the authority to remit late stamping penalties provided to the Collector of Stamp Duty under subsection 47A(2) of the Stamp Act 1949. In addition, employment contracts finalised from Jan 1, 2025, to Dec 31, 2025, will be subject to stamp duty. However, a remission of late stamping penalties will be granted, provided that the employment contracts are stamped on or before December 31, 2025. This relief is exercised under the powers of the Collector of Stamp Duty under subsection 47A(2) of the Stamp Act 1949. According to the IRB, starting Jan 1, 2026, employment contracts finalised from that date onwards will be subject to stamp duty, and any delays in stamping will result in penalties being imposed. In light of these developments, the IRB urges all employers to review and update existing and upcoming employment contracts to ensure full compliance with stamping requirements as stipulated under the Stamp Act 1949. – Bernama audit employment inland revenue board stamp
The Star
06-06-2025
- Business
- The Star
All job contracts must be stamped from next year, says LHDN
PUTRAJAYA: The Inland Revenue Board (LHDN) has announced that all employment contracts between employers and employees must be stamped with effect from Jan 1 next year. This directive is in line with the phased implementation of the Stamp Duty Self-Assessment System as outlined in Budget 2025, it said in a statement on Friday (June 6). ALSO READ: 'Stamp duty for job contracts another burden for businesses' LHDN said comprehensive stamp duty audit activities had already been conducted nationwide since January this year, following the issuance of the Stamp Duty Audit Framework. "Through the audit activities and compliance operations, one of the key findings has been that many employment contract documents between employers and employees have not been stamped as required under Item 4, First Schedule of the Stamp Act 1949, where the stamp duty is set at RM10," the statement read. It said that to ease the burden on employers, the Finance Ministry has agreed to exempt employment contracts executed before Jan 1 this year from stamp duty obligations. ALSO READ: Job contracts stamping rule could hurt SMEs This requirement is enforced based on the powers granted to the Finance Minister under subsection 80(1A) of the Stamp Act 1949 and the authority to remit late stamping penalties provided to the Collector of Stamp Duty under subsection 47A(2) of the same Act. In addition, employment contracts finalised from Jan 1 to Dec 31 this year will be subject to stamp duty. However, a remission of late stamping penalties will be granted, provided that the employment contracts are stamped on or before Dec 31, under the powers of the Collector under subsection 47A(2) of the Act. ALSO READ: Stamp duty on employment contracts burdens businesses, says association According to LHDN, employment contracts finalised from Jan 1 next year will be subject to stamp duty, and any delays in stamping will result in penalties being imposed. It urged all employers to review and update existing and upcoming employment contracts to ensure full compliance with stamping requirements as stipulated under the Act. – Bernama
The Sun
01-06-2025
- 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
01-06-2025
- 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.
