KOTA KINABALU: The Sabah Association of Professional Accountants (SAPA) is urging the federal government to reconsider the blanket enforcement of stamp duty on all employment contracts.

The group warns that the policy could burden small and medium-sized enterprises (SMEs), particularly in Sabah.

While acknowledging the legal and fiscal rationale behind the Inland Revenue Board’s directive, SAPA president Datuk Tan Kok Liang stated that the policy must consider the realities of doing business in less-developed regions like Sabah.

"This requirement places additional administrative and financial burdens on employers, especially SMEs operating under constrained resources and geographical challenges," he said on Tuesday (June 3).

He added that SAPA calls for a more balanced approach by exempting contracts with monthly salaries below RM4,000, offering exemptions to micro and small enterprises, and phasing in the policy with an implementation date no earlier than January 1 next year, alongside stakeholder engagement and educational outreach.

Tan noted that the directive risks discouraging small businesses from formalising employment contracts due to overregulation and red tape.

"This could inadvertently leave workers in rural or semi-urban Sabah vulnerable and without formal employment protection," he said.

He added that while the Stamp Act 1949 was enacted for legal clarity and contractual certainty, its enforcement must evolve.

"In practice, employment contracts have been respected by both employers and employees, with or without a stamp. Strict enforcement based on outdated provisions is counterproductive," he said.

Tan then said that SAPA believes reforming the Stamp Act to reflect modern business practices is essential to prevent it from becoming solely a revenue collection tool.

"We remain confident that through constructive dialogue, a balanced policy solution can be achieved, one that upholds the law while safeguarding local businesses and promoting employment," said Tan.