- 6% service tax on private education for international students begins July 1, 2025.
- Tax applies to preschools, schools, colleges, universities, and language centres.
- May impact Malaysia’s goal of attracting 250,000 international students by 2025.
From 1 July 2025, Malaysia will impose a 6% service tax on private education services for foreign students. The new tax will be applied to all private preschools, schools, colleges, universities, and language centres serving foreign students who are not Malay students.
One of Malaysia's new Sales and Service Tax (SST) framework components, the requirement obliges private institutions whose annual tuition fees are above RM60,000 to register for SST. But providers of higher education and language centres are required to register irrespective of turnover if they cater to international students. Malaysians are still exempt from this tax.
The Ministry of Finance noted the move will help enhance the fiscal standing of Malaysia by widening the tax base without increasing the burden on local residents.
Malaysia has also committed to welcoming 250,000 overseas students by 2025 under its Education Development Plan (2015–2025). But experts see the tax as potentially driving international student numbers down. The British Council warned in an interview with The PIE News that the extra charge may scare off price-sensitive students from emerging economies and result in a reduction in enrolment in UK transnational education (TNE) programmes, which are dependent on local private partners in Malaysia.
The British Council has recommended that UK institutions take guidance from their Malaysian partners for clarity and advise expert tax advice, observing that the change would have an impact on Malaysia's appeal as a worldwide education centre.
