Budget 2026: Higher Stamp Duty Exemption Threshold To Ease Business Costs

Budget 2026

Samuel Chua

13th October 2025 - 3 min read

Employer groups have welcomed the government’s announcement to raise the salary threshold for stamp duty exemption on employment contracts from RM300 to RM3,000. The change, introduced under Budget 2026, will take effect on 1 January 2026 and is expected to reduce operating costs while simplifying administrative work for employers.

Lower Costs And Simpler Processes For Employers

Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman described the measure as timely and progressive. He said it would help reduce the financial burden faced by companies, particularly those employing large numbers of lower-wage workers in sectors such as manufacturing, retail, agriculture, and services.

He added that the higher exemption limit would streamline administrative work for employers, especially micro, small, and medium enterprises (MSMEs). By removing the need to repeatedly stamp employment contracts for workers earning below RM3,000, businesses could save both time and money.

According to Dr Syed Hussain, this initiative reflects the government’s awareness of the financial and compliance pressures faced by employers amid rising labour costs and post-pandemic recovery efforts.

Encouraging Formal Employment Practices

The MEF president also noted that the change supports the government’s broader goal of promoting a more conducive business environment. By reducing the costs of formal documentation, more employers are expected to properly record employment agreements, enhancing transparency and compliance with labour regulations.

“This initiative reflects the government’s commitment to creating a business-friendly ecosystem while encouraging formal employment practices,” he said.

Savings For Businesses And Realistic Wage Alignment

SME Association of Malaysia president Dr Chin Chee Seong said that businesses could save around RM10 per employment contract through the exemption. He added that the revised RM3,000 limit is more realistic, as very few employees now earn as little as RM300 in monthly wages.

However, Dr Chin noted that some businesses might still face challenges related to paperwork and compliance under the new threshold.

Supporting Low-To Mid-Income Employment

Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry (KLSICCI) president Nivas Ragavan said the adjustment would particularly benefit companies employing low- to mid-income workers.

“It directly reduces administrative and onboarding costs for employers, making it easier and cheaper to formalise employment contracts,” he said.

He added that the move, long overdue, reflects current wage realities and encourages companies to move away from informal or cash-based employment. This, in turn, benefits young job seekers, part-timers, and gig workers, promoting fairer and more transparent hiring practices.

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