KUALA LUMPUR (June 2): Chinese businesses are requesting that the government raise the exemption threshold for the mandatory stamping of employment contracts.
Under the Stamp Act 1949, formal employment contracts are subjected to stamp duty — regardless whether they are for full-time or part-time, local or foreign staff — at a flat rate of RM10 per contract.
Contracts for those earning below RM300 per month are exempted from the rule, meaning that virtually every employment contract will be affected given that Malaysia’s minimum wage is now RM1,700 per month.
The exemption threshold is outdated and should be reviewed to a “realistic” threshold of RM10,000, the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) said in a statement.
The association is also asking the government for a “grand amnesty” on non-compliance for the audit period back to January 1, 2022. “Additionally, a grandfathering rule can be applied so that it is not being retroactively applied to provide certainty,” the ACCCIM said.
While the law dates back more than seven decades, the Internal Revenue Board (IRB) rarely enforces the mandate to stamp job contracts within 30 days of their signing, failure of which results in a penalty of RM100 penalty or 20% of the duty, whichever is higher.
However, news reports emerged last month of the IRB beginning to enforce the law, raising concerns among the ACCCIM and other trade bodies.
The statement released on Monday follows a meeting between the ACCCIM and Minister of Human Resources Steven Sim Chee Keong on an unspecified date.
The discussion covered a wide range of issues, including foreign workers, employment contracts stamping, the multi-tier levy mechanism, progressive wage policy, and the power of the Department of Occupational Safety and Health, the ACCCIM noted.
Source: https://theedgemalaysia.com/node/757556