Malaysia’s New 6% Service Tax on Private Education to Impact International Students
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Malaysia will implement a 6% service tax on private education for international students starting 1 July 2025, a move that could affect tuition fees and potentially dampen enrolment numbers across private institutions.
The revised Sales and Service Tax (SST) will apply to private preschools, schools, universities, colleges, and language centres offering services to non-Malaysian students. Public education institutions will remain exempt, and Malaysian citizens will not be required to pay the tax.
According to the Ministry of Finance, the policy aims to “strengthen the country’s fiscal position by increasing revenue and broadening the tax base without adding undue burden on the majority of Malaysians.”
Private institutions that collect more than RM60,000 annually in tuition fees per student must register for the SST. Higher education institutions and language centres will be required to register regardless of turnover if they serve international students.
The decision has sparked concern among education providers and international stakeholders. The British Council highlighted potential challenges to UK transnational education (TNE) programmes in Malaysia, which rely heavily on private local partners and attract many international students.
“While the SST does not affect Malaysian students, it could impact enrolments in UK TNE programmes and Malaysia’s appeal as a study destination—especially for price-sensitive students from developing countries,” the British Council stated.
It urged UK universities to consult local partners and consider the financial implications, particularly as Malaysia aims to position itself as a global education hub.
The country is targeting 250,000 international students by 2025 under its Education Development Plan, with a strong emphasis on public-private collaboration. However, the tax may challenge these ambitions by increasing the cost of education for non-Malaysian students.
With Malaysia a key market for UK higher education partnerships, the new tax could influence long-standing collaborations and the country’s competitiveness in the international education sector.
Source: THE PIE NEWS
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