Malaysia to Impose 6% Service Tax on Private Education for International Students

Starting July 1, 2025, Malaysia will introduce a 6% service tax on private education services offered to international students. The move is part of the country’s updated Sales and Service Tax (SST) framework, aimed at boosting government revenue and widening the tax base.

The tax will apply to private preschools, schools, colleges, universities, and language centres that serve non-Malaysian students. Institutions charging more than RM60,000 in annual tuition must register for the tax. However, all higher education providers and language centres will be required to register regardless of turnover if they enrol international students. Malaysian students and the institutions serving them will remain exempt.

The Ministry of Finance said the measure is designed to improve the country’s fiscal strength “without adding undue burden on the majority of Malaysians.” However, observers warn the change may affect Malaysia’s efforts to remain competitive as a global education hub.

Impact on International Student Enrolment and Education Goals

The tax comes at a time when Malaysia is working to attract 250,000 international students by the end of 2025, a target outlined in its Education Development Plan 2015–2025. Stakeholders are now raising concerns that the new tax could make Malaysia a less attractive destination for cost-sensitive international students.

The British Council, in a statement to The Pie News, noted that the expanded SST would not affect Malaysian students but could influence enrolments in UK transnational education (TNE) programs. These programs often operate in partnership with Malaysian private institutions and host a significant number of international learners.

Analysts suggest the tax may particularly affect students from developing countries who are drawn to Malaysia for its relatively affordable tuition and living costs. Industry players are urging the government to consider the potential long-term effects on enrolment and the international reputation of Malaysian education. The Ministry has not announced any exemptions or adjustments specific to transnational education partnerships as of now.