Latest news with #StampAct1949
New Straits Times
06-07-2025
- Business
- New Straits Times
Call to simplify stamp duty exemption for older work contracts
KUALA LUMPUR: The Malaysian Industrial, Commercial and Service Employers Association (MICSEA) has called on the Inland Revenue Board (IRB) to allow a one-time bulk submission of employment contracts signed before 2025 to obtain stamp duty exemption certificates. MICSEA said the proposal would simplify compliance and reduce paperwork for employers following the IRB's latest frequently asked questions (FAQs) issued on July 3. "This initiative would encourage more employers to come forward and regularise their documents in an efficient, streamlined manner," MICSEA said in a statement. The IRB's new FAQ document aims to clarify employers' obligations under the Stamp Act 1949. Key takeaways include the clarification that employment contracts signed before Jan 1, 2025, and already exempt from stamp duty, may still be submitted for certification, as outlined in Question 15 of the FAQ. The use of the word "boleh" (may) indicates that submission is optional, providing flexibility for employers. However, from Jan 1, 2025, onwards, all employment contracts must be stamped, in accordance with subsection 4(1) of the Stamp Act. Question 17 uses the word "hendaklah" (must), affirming that stamping is mandatory for all new contracts going forward. The FAQ also distinguishes between internship and apprenticeship agreements. In Question 7, the IRB confirms that internship agreements are not required to be stamped, as they do not constitute a formal employer-employee relationship. MICSEA welcomed this clarification, calling it "crucial and welcomed", especially for companies running internship programmes as a talent pipeline. "In contrast, apprenticeship agreements do require stamping, as these are considered formal employment relationships governed under the Employment Act 1955," MICSEA said. MICSEA also urged employers to review the full FAQ and consult experts where needed. The association said it is working with HR consultants and certified training providers to roll out further support and compliance training. "We remain committed to supporting employers in navigating policy changes while maintaining fair, compliant practices," it added.
Borneo Post
05-07-2025
- Business
- Borneo Post
Internship agreements not subject to stamp duty, MICSEA confirms
Lai says the clarification is both timely and essential, particularly for employers seeking to comply with legal requirements without unnecessary confusion. — Bernama photo KUCHING (July 5): Internship agreements are not required to be stamped as they do not constitute a formal employer-employee relationship, said the Malaysian Industrial and Commercial Employers Association (MICSEA), citing clarifications from the Inland Revenue Board (LHDN) FAQs. MICSEA president YK Lai said the clarification is both timely and essential, particularly for employers seeking to comply with legal requirements without unnecessary confusion. 'This clarification is crucial and welcomed, as it ensures that companies can continue to offer internships without administrative hurdles or added cost implications,' he said in a statement. 'With this, many employers can now confidently enhance their internship programmes without fear of non-compliance. It also ensures that internship opportunities will not be disrupted or deterred, supporting the government's initiative to prepare students to be industry-ready upon graduation.' He added that many companies view internship programmes as an important talent pipeline, and the assurance provided will allow them to contribute meaningfully to graduate employability and real-world exposure. In contrast, Lai said apprenticeship agreements do require stamping as they are considered formal employment relationships governed under the Employment Act 1955. He added that employment contracts that have been exempted may obtain a stamp duty exemption certificate. 'This implies that submission is optional, offering flexibility to employers with exempted pre-2025 contracts.' He further noted that employment contracts sealed from 2025 onward must be submitted to LHDN for stamping in accordance with subsection 4(1) of the Stamp Act 1949. To further promote voluntary compliance and ease the process, Lai proposed that LHDN allow for a one-time bulk submission of all employment contracts signed before Jan 1, 2025 to obtain the stamp duty exemption certificate. 'This initiative would encourage more employers to come forward and regularise their documents in an efficient, streamlined manner,' he said. He also called on all employers to review the full FAQs for better understanding and continue consulting with relevant experts where needed. 'MICSEA is working closely with all its members together with HR Edge Consulting Sdn Bhd (HRedge) and will issue further guidance to support smooth implementation via training with MyFreelys Academy, a certified HRDCorp Training Provider. 'We remain committed to supporting employers in navigating policy changes while maintaining fair, compliant practices,' added Lai. employment internship LHDN MICSEA stamp duty
Focus Malaysia
13-06-2025
- Business
- Focus Malaysia
Stamping of employment contract: Is it necessary?
ON June 6, the Inland Revenue Board of Malaysia (LHDN) has clarified the stamp duty treatment of employment contracts. In its official media statement, LHDN outlines how employment contracts will be treated across three key timeframes below, helping employers and HR professionals navigate the complexities of compliance: Contracts executed before 1 January 2025 are exempt from stamp duty and no penalties for late stamping will be imposed. are exempt from stamp duty and no penalties for late stamping will be imposed. Contracts executed between 1 January 2025 and 31 December 2025 are subject to stamp duty, but no late stamping penalties apply if stamped within the year. are subject to stamp duty, but no late stamping penalties apply if stamped within the year. Contracts executed from 1 January 2026 onwardswill be fully subject to stamp duty and late stamping penalties. This announcement has raised questions about whether stamping employment contracts is necessary at all. In many jurisdictions, including Malaysia, it is not a common practice to stamp employment agreements. Admissibility, not validity Stamp duties are imposed on instruments and 'instrument' includes every written document under the Stamp Act 1949. The Act provides that instruments which are not duly stamped are inadmissible as evidence in court. The Federal Court in Malayan Banking Bhd v Agencies Service Bureau Sdn Bhd & Ors [1982] 1 MLJ 198 held that the unstamped document only affects the admissibility of the document in evidence and does not invalidate the document: 'The purpose of the Stamp Ordinance 1949 is to impose and to collect taxes on legal and commercial documents by compelling these documents to be stamped on pain of being inadmissible…. a stamp objection really relates to the safeguarding the government revenue, … unless of course the lack of stamping goes to the root or the validity of the document itself or the case is a revenue dispute.' Hence, an unstamped document is not automatically void or invalid but rather, it cannot be used as evidence in judicial proceedings until the applicable stamp duty is paid, along with any penalties for late stamping. Late stamping penalty Effective from January 1, 2025 the late stamping penalty rates have been revised as follows: RM50 or 10% of the deficient duty, whichever is higher, if stamped within 3 months after the time for stamping; RM100 or 20% of the deficient duty, whichever is higher, if stamped after 3 months from the time for stamping. From a practical perspective, the monetary impact of late stamping for standard employment contracts is minimal, which is subject to a nominal stamp duty of RM10. Practical considerations and risks of delayed stamping Given the relatively low penalties for late stamping, some employers may opt not to stamp employment agreements at the outset, particularly where no immediate dispute is anticipated or where litigation appears unlikely. Instead, stamping may be deferred until the agreement is required for legal proceedings. While this may offer short-term administrative convenience or cost savings, such an approach carries several practical and legal risks that should be carefully considered: Delays in legal proceedings : An unstamped contract cannot be admitted as evidence in court until it has been properly stamped. This can be particularly problematic in urgent applications, such as for injunctions or interim relief, where an inability to rely on the contract may hinder the timely pursuit of legal remedies. : An unstamped contract cannot be admitted as evidence in court until it has been properly stamped. This can be particularly problematic in urgent applications, such as for injunctions or interim relief, where an inability to rely on the contract may hinder the timely pursuit of legal remedies. Adverse perception in disputes : Failure to stamp an agreement may give the impression of non-compliance or an attempt to evade statutory obligations, which could affect the employer's credibility. : Failure to stamp an agreement may give the impression of non-compliance or an attempt to evade statutory obligations, which could affect the employer's credibility. Penalties for non-compliance: Executing or signing a document chargeable with duty without the requisite stamping may attract fines. With the Stamp Duty Self-Assessment System set to be implemented on January 1, 2026 LHDNis expected to step up audit and enforcement efforts to ensure compliance. Despite these considerations, delayed stamping may still be legally viable for some employers, since late stamping penalty is still relatively low and there is a minimal risk of litigation. Nonetheless, both employers and employees are strongly encouraged to stamp employment contracts promptly to ensure full compliance and to avoid procedural or administrative complications should the agreement later be required in legal proceedings. ‒ June 13, 2025 Leonard Yeoh is a senior partner and Pua Jun Wen a senior associate with the law firm, Tay & Partners. The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia. Main image: Bernama
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Daily Express
10-06-2025
- Business
- Daily Express
Assess hidden risks before 2026 stamp duty reform
Published on: Tuesday, June 10, 2025 Published on: Tue, Jun 10, 2025 Text Size: KOTA KINABALU: Businesses are urged to assess their stamp duty exposure ahead of the self-assessment regime set to begin in January 2026. While recent exemptions on employment contracts offer some clarity, experts warn that many other agreements such as intercompany, vendor, leasing, and tenancy contracts may still attract stamp duty, including ad valorem charges. Advertisement The Inland Revenue Board (LHDN) is already auditing businesses on compliance, and many are unaware that even unsigned or digital agreements could fall under the Stamp Act 1949. With the law's outdated definitions and lack of clarity, risk assessments are essential to avoid penalties. Stakeholders are calling for clearer guidelines and long-overdue legislative reform to reflect modern business practices. Companies, especially large and mid-sized, are advised to form cross-functional teams to review their agreements and prepare before the new system takes effect. * 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
The Star
10-06-2025
- Business
- The Star
The stamp duty Pandora's box
STAMP duty is a topic that many think of only when purchasing a property, renting, bank financing and purchasing a company's shares. In actuality, the list of instruments chargeable with stamp duty spans well over 20 pages. The list is found in the first schedule of Stamp Act 1949 (as amended). The said list includes 'Agreements' in broad terms. On June 6, the Inland Revenue Board (LHDN) made an announcement that the government would remit stamp duty on employment contracts entered prior to Jan 1, and time is allowed until the end of the year for employment contracts entered during the year. This is good news in providing certainty to businesses while the technicalities are being worked out as to whether the various employment-related documentations are required to be stamped. Given that the ministerial exemption is limited to only employment contracts, businesses such conduct a risk or impact assessment in relation to all other agreements – including those entered into prior to Jan 1. The risk or impact assessment such include the following: > Intercompany agreements for services/financing within the same group of companies, > Agreements with third party customers/vendors for services or lease of equipment, > Tenancy agreements, and > Any other agreements. The list above is not exhaustive. It is important to recognise that not all agreements are subject to a nominal stamp duty of RM10. Some agreements attract an ad valorem duty, which means the duty is a percentage or is in proportion to the instrument/contract value. Risk assessment is important to create a self-awareness on the organisation's affairs and potential exposure, given that LHDN has been actively auditing businesses for stamp duty compliance since beginning of this year. One should not confine the risk assessment exercise to physical documents bearing the title 'Agreement'. Offer, acceptance and consideration are the key elements of a contract – in which case an 'Agreement' may be perceived for stamping purposes. Some may view that even a purchase order or quotation that is signed by both parties involved in a transaction constitutes an 'Agreement'. Likewise, there is also uncertainty about subscriptions or services signed over the Internet whereby there is no actual signature, but the customer simply checks the box to agree with the terms and conditions. It is no secret that the 75-year-old legislation has not kept up with time. Although there had been minor adaptations over the years, a holistic reform of this legislation is certainly overdue to reflect the evolution of business practices, digitalisation and perhaps policy goals. For a start, the policy makers clearly divide instruments which are in-scope for fiscal revenue purposes as compared to a mere token duty for the government to have a record of the transaction. The list of instruments included for the latter purpose should be revisited in light of the successful implementation of e-Invoicing and other existing mechanism. There are many aspects of uncertainty in the stamp act. This includes when stamping is mandatory, which instruments/agreements are in-scope for stamping and whether a given instrument/agreement is subject to nominal duty or ad valorem duty (being a percentage of contract value). This is evident with recent judicial decisions. It is hoped that the necessary legal adaptations would be made to simplify and foster certainty to make compliance easy for diligent taxpayers. Needless to say, guidelines and programmes to promote awareness among businesses on the scope of agreements for stamping are welcome. Further guidelines It is widely anticipated that the LHDN will issue further guidance on stamping of 'agreements' in the coming months, especially given that legislative changes had already been made to implement self-assessment for stamp study effective from Jan 1, 2026. In the meantime, businesses should be performing their own impact and risk assessment to identify any potential compliance gap and identify any grey areas in the Stamp Act 1949. Findings of this voluntary exercise would empower the management of the business with the much-needed information to make informed choices in navigating the situation. Inaction or a 'wait and see' approach would not be a wise choice given that LHDN has been actively auditing businesses on stamp duty compliance matters. Such audits cover the agreements entered in the years prior to 2025. For clarity, an impact or risk assessment is certainly not the act of doing a stock-take of everything that appears to be possibly an 'Agreement' and subjecting all of such agreements to stamping. Addressing key questions The process of performing the assessment must raise and address key questions as to whether each of the case involves an 'instrument' for which stamping is mandatory, and whether any of the existing exemptions is applicable. Where appropriate, businesses may also use the findings of the impact or risk assessment to proactively engage with the authorities. Large and medium businesses should form a project team to assess the impact and risks. Input from non-tax or non-financial functions are essential given that the organisations agreements may be 'scattered' across the organisation (for example, between legal department, sales department, corporate affairs and human resources). With only six months to go for the implementation of self-assessment for stamp duty (and widespread stamp duty audits being already undertaken now), businesses that value good governance and risk management practices should embark on the stamp duty impact and risk assessment project as soon as practicable. Thenesh Kannaa is an executive director of TRATAX Sdn Bhd, an independent tax consulting firm. The views expressed here are the writer's own.
