Stamp Duty Legal Update: Stamp Duty Treatment on Employment Contracts and Exempt Instruments

On 7 August 2026, the Inland Revenue Board of Malaysia (HASiL) issued an official media release setting out clear confirmation on stamp duty treatment and endorsement procedures for employment contracts as well as instruments under Exemption and General Exemption categories pursuant to the First Schedule of the Stamp Act 1949.

This confirmation establishes uniformity, certainty and clarity for employers and taxpayers, outlining distinct stamping rules based on monthly wage thresholds and document classification.

Key Updates

1. Employment Contracts with Wages ≤ RM3,000 & Specific Instruments Listed Under the Heading “Exemptions” in First Schedule’s Items

• Full Exemption from Stamping and Endorsement: Instruments listed under the “Exemption” category of specific Items in the First Schedule, including employment contracts with monthly salary of RM3,000 or less are completely exempt from both stamping and endorsement requirements. In other words, it is now clear and certain that applying for HASiL’s exemption certificate in respect of such instruments is no longer mandatory.
  

2. Employment Contracts with Wages > RM3,000

• Stamping of Principal Employment Contract Only: For employment contracts where monthly wage exceeds RM3,000, only the principal employment agreement needs to be stamped and endorsed by HASiL.
• Exemption for Ancillary Documents: Any ancillary or secondary instruments relating to the same employment agreement are exempt from both stamping and endorsement. 

3. “General Exemption” Category (Section 35, Stamp Act 1949)

• Mandatory Endorsement Requirement: Instruments falling under the “General Exemption” category (specifically instruments exempted under Section 35 of the Stamp Act 1949) listed in the First Schedule must still be endorsed for HASiL to verify that only qualified parties and eligible instruments can validly claim stamp duty exemptions.

Summary Table

Key Implications on Businesses and Taxpayers

• Stamping treatment of employment documents streamlined: The latest HASiL’s media statement restricts stamping and endorsement solely to the principal employment agreement with monthly wage above RM3,000 and resolves administrative redundancies regarding secondary paperwork (such as side letters, benefit schedules or ancillary addendums), ensuring the employers do not process secondary employment paperwork twice.
• Exemption on ancillary employment-related instruments: While HASiL’s media statement does not list out the specific instrument types, the general language used indicates that supplementary instruments or ancillary letters such as promotion letter, bonus letter, salary increment letter, etc would likely fall within the exemption and would not require endorsement.

  Nevertheless, it is still necessary to review the substantive contents of the ancillary document, to verify if it establishes entirely new contractual terms or independent legal obligations that could render it separately chargeable with stamp duty.  

• Full relief for instruments under specific “Exemptions” in First Schedule’s Items: For instruments falling under this category, the taxpayers are fully relieved from both stamping and endorsement obligations effective from 7 August 2026.
• Verification authority on instruments under “General Exemptions” maintained: HASiL maintains its verification authority on instruments falling within the “General Exemptions” under the First Schedule, requiring mandatory endorsement by taxpayers to ensure valid exemption claims.

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This article was written by Chin Wan Xin (Associate) from Donovan & Ho’s corporate practice. 

Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds. Feel free to contact us if you have any queries.