Beginning July 1, 2025, Malaysia will implement a 6% service tax on private education services provided to international students. The move, part of the revised Sales and Service Tax (SST) framework announced by the Ministry of Finance, applies to all levels of private education—including preschools, schools, universities, and language centres—specifically targeting non-Malaysian students. Malaysian students will remain exempt.
This tax change could significantly impact Malaysia’s appeal as an affordable study destination, particularly for students from price-sensitive markets such as India, South Asia, Africa, and Southeast Asia. The country has long marketed itself as an international education hub, offering English-medium instruction and globally recognised degrees at competitive costs.
Key Regulations:
Mandatory SST Registration:
All private institutions and language centres educating international students must register for SST, regardless of annual turnover.
Institutions charging more than RM60,000 (approximately ₹12.17 lakhs) in annual tuition fees are automatically required to register.
Exemptions:
Malaysian students will not be affected by the new tax.
Institutions with an annual turnover below RM500,000 will remain exempt from SST.
Concerns from the Education Sector:
The new policy has raised concerns among stakeholders who argue it may undermine Malaysia’s target of enrolling 250,000 international students by 2025, as outlined in the country’s Education Development Plan (2015–2025).
In comments to The PIE News, the British Council warned that the SST could negatively affect enrolments in UK transnational education (TNE) programs run in partnership with Malaysian private institutions. These programs are especially popular among students from developing countries who are highly cost-conscious.
The Council encouraged UK institutions to consult local partners for clarity and offered assistance in connecting them with professional tax advisors.
Government’s Justification:
The Finance Ministry defended the policy as a necessary step to “strengthen the country’s fiscal position by increasing revenue and broadening the tax base without adding undue burden on the majority of Malaysians.”
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