Under the revised Sales and Service Tax (SST) rules coming into effect on July 1 2025, a 6% service tax will apply to private education services provided to non-Malaysian students. This includes preschools, schools, colleges, universities, and language centres, although public education remains fully exempt.
Private schools must register for SST if they charge over RM60,000 per year in tuition fees per student. For higher education institutions and language centres, registration is mandatory regardless of turnover if they serve international students. Malaysian citizens are exempt from paying the tax.
In a statement released on June 9, the Malaysia’s Ministry of Finance said this measure is being implemented to “strengthen the country’s fiscal position by increasing revenue and broadening the tax base without adding undue burden on the majority of Malaysians”.
Malaysia has been steadily growing in popularity as a study destination, with a huge spike in students from East Asian countries such as China.
Since the announcement, the British Council has issued a statement reflecting on the potential implications of the tax on the sector, particularly for international partnerships.
It noted that “while the expanded SST will not affect Malaysian higher education students (who form the bulk of students from Malaysia) the imposition of SST could well impact enrolments in UK transnational education (TNE) programs, which are mainly run in collaboration with private local institution partners and receive a significant number of international students.
This could also impact Malaysia’s attractiveness as a study destination, especially amongst students from developing countries who can be price sensitive
British Council
“This could also impact Malaysia’s attractiveness as a study destination, especially amongst students from developing countries who can be price sensitive,” it continued.
It advised UK institutions to speak to local partners for clarity on the implications of the tax, and offered to link up institutions with tax professionals.
Malaysia is one of the most important markets for the UK when it comes to TNE partnerships, and private universities and colleges in Malaysia have a longstanding tradition of collaborating with UK institutions to deliver UK qualifications locally.
The news comes as Malaysia works towards its official goal of attracting 250,000 international students by 2025, across public and private higher education providers – a target that comes under the Malaysian Education Development Plan 2015-2025 (Higher Education).
