Here are Malaysia’s statutory updates for 2026.
Effective June 2026
Revised Expatriate Employment Policy to Introduce Salary Thresholds and Tenure Caps
- New salary thresholds:
- Category I: Minimum RM20,000/month
- Category II: RM10,000 to RM19,999/month
- Category III: RM5,000 to RM9,999/month (minimum RM7,000 in manufacturing-related sectors)
- Maximum duration limits:
- Category I and II: Up to 10 years
- Category III: Capped at 5 years
- Revisions seek to address salary compression and over-reliance on long-term expatriate roles in sectors with strong local talent pipelines.
- Employers should plan for compliance with new thresholds and ensure structured succession and knowledge transfer processes are in place.
Effective January 2026
Mandatory Employment Contract Stamping
Malaysia’s Inland Revenue Board (LHDN) now requires that all new employment contracts executed from 1 January 2026 be electronically stamped through the MyTax portal.
Key Points:
- Applies to all new employment contracts executed from 1 January 2026.
- Stamping must be completed within 30 days of execution or receipt in Malaysia.
- Late stamping results in statutory penalties and interest charges.
- HR teams should establish workflows and track compliance.
Source: Inland Revenue Board of Malaysia, The Star
Mandatory e‑Invoicing Rollout for Businesses with RM1 Million–RM5 Million Turnover
The Inland Revenue Board of Malaysia (LHDN) is continuing its phased implementation of the national e‑invoicing system. From 1 January 2026, businesses with annual turnover between RM1 million and RM5 million must begin mandatory e‑invoicing as part of Phase 4 of the rollout, marking a key step in digitising invoicing and tax reporting processes.
Key Points:
- Businesses with annual turnover between RM1 million and RM5 million are required to comply with e‑invoicing starting 1 January 2026.
- Consolidated e‑invoices are no longer permitted for transactions exceeding RM10,000; individual e‑invoices must be issued for each such transaction.
- A six‑month interim grace period applies for Phase 4 businesses to adjust to the new system, during which some flexibility is allowed in invoice formatting and reporting.
- Phase 5 (businesses with RM500,000–RM1 million turnover) will begin on 1 July 2026, while businesses below RM500,000 remain exempt from mandatory e‑invoicing.
Source: Inland Revenue Board of Malaysia, Malay Mail
1:3 Internship Policy for Employers with EP Holders
Malaysia’s new internship policy requires companies employing foreign nationals on Employment Passes to offer structured internships to Malaysian students in a 1:3 ratio.
Key Points:
- For every foreign national employed under an Employment Pass, employers must provide up to three paid structured internships.
- Internships must be at least 10 weeks long with stipends between MYR 500–600 per month.
- Employers and students manage placements through the MyNext online platform.
- Eligible companies can claim double tax deductions via the MySIP scheme.
