Malaysia Introduces 6% Education Tax for International Students from July 2025

Malaysia’s recent announcement to impose a 6% service tax on private education for international students, effective July 1, 2025, has sparked concern among global education stakeholders. The move, aimed at expanding Malaysia’s tax base, could have unintended consequences for student mobility, international partnerships, and the country’s status as a regional education hub.

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Who Will Be Affected?

The 6% service tax will apply to:

Private preschools, schools, colleges, universities, and language centres catering to non-Malaysian students.

All private higher education institutions and language centres, regardless of their annual revenue, if they enroll international students.

Other private institutions (such as K-12) only if they generate more than RM60,000 per student per year.

Public institutions and Malaysian citizens remain exempt from the new tax.

Tuition Hike Likely for International Students

While the government defends the policy as a step to “broaden the tax base without burdening Malaysians,” experts warn that it could raise tuition costs for foreign students by 6%,a considerable increase in a price-sensitive market. For students from South Asia, Africa, and developing nations, cost is a key decision-making factor, and this change could shift their preferences to more affordable destinations.

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The tax could also strain UK–Malaysia transnational education (TNE) partnerships, where UK universities deliver programs via Malaysian private colleges and campuses. The British Council has urged UK institutions to review their arrangements and consult local tax experts to assess the financial and legal implications.

TNE enrollments, which form a large portion of Malaysia’s international education offerings, may drop as a result of increased costs, affecting both local providers and foreign partners.

This tax arrives as Malaysia pursues its ambitious target to host 250,000 international students by 2025, outlined in its Malaysia Education Blueprint (2015–2025). With just months to go before the tax takes effect, institutions may struggle to maintain competitiveness, especially when neighboring countries like Thailand or Vietnam offer more affordable alternatives.

Malaysia has long been seen as a cost-effective, English-speaking destination for international education. But this tax could reshape Southeast Asia’s higher education landscape, pushing students toward other countries with tax-free private education policies.