Malaysia to Impose 6% Tax on Private Education for International Students from July 2025

Malaysia will introduce a 6% service tax on private education services offered to international students starting July 1, 2025, under its updated Sales and Services Tax (SST) policy. The decision is aimed at expanding the country’s tax base and improving fiscal strength without increasing costs for most local citizens.

As Business Today reported, the tax will apply to all private pre-schools, schools, colleges, universities, and language centres that provide education services to non-Malaysians. However, education services for Malaysian citizens will remain exempt if the institutions fall under a specific threshold.

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According to The Economic Times, this new policy specifically targets foreign student services, making it mandatory for private institutions to register for SST if their revenue exceeds RM 500,000 annually. Institutions offering higher education or language instruction to foreign students will have to register for SST regardless of their earnings.

Rising Costs Could Impact Indian and Other International Students

Malaysia has been a popular and cost-effective study destination for Indian and regional students. However, the added 6% tax could increase the annual tuition burden by several thousand Malaysian ringgit, depending on the institution.

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As reported by Business Today, private universities that charge more than RM 60,000 per year in tuition (approximately ₹12 lakh) would add about RM 3,600 per year in tax. This sudden cost rise could influence parents and students to reconsider Malaysia as a preferred destination.

The British Council has also expressed concern that the new tax could hurt transnational education partnerships, such as UK university programs delivered in Malaysia, which heavily rely on international enrollments.

Malaysia’s Ministry of Finance stated that the tax expansion is meant to strengthen public finances without burdening domestic students. Services provided to Malaysian citizens, especially where fees are lower or fall under exemptions, will not be affected.

As per MFR.mv, institutions with less than RM 500,000 in annual revenue will remain outside the SST requirement. However, the rule is compulsory for all institutions teaching international students, which signals a shift in Malaysia’s approach toward monetizing foreign education demand.

What This Means for Study Abroad Aspirants

The move adds a new cost consideration for international students, especially those from India, Bangladesh, Nepal, and Indonesia, who have historically chosen Malaysia for its affordability. For many families, this tax could change the financial feasibility of studying in Malaysia compared to destinations that don’t impose similar levies.

As Economic Times noted, unless institutions or governments offer transitional relief or scholarships, the tax might lead to a decline in international enrollments, particularly from cost-conscious markets.

While Malaysia’s new 6% tax is part of a broader economic policy, it introduces new financial challenges for foreign students and could shift regional education preferences. As the global education market becomes increasingly competitive, international students may start comparing value-for-money and tax implications more seriously when choosing a study destination.