Malaysia introduces 6% tax on private education services for international students: Impact on Indians

Starting July 1, 2025, Malaysia will impose a 6% service tax on private education services catering to international students, a move that could reshape the country's appeal as an affordable study destination. The new tax applies across preschools, schools, universities, and language centres, as part of Malaysia’s revised Sales and Service Tax (SST) framework.

Announced by Malaysia’s Ministry of Finance, the tax will specifically target non-Malaysian students enrolled in private institutions. Malaysian students remain exempt. The impact on Indian students might be as follows.

Under the updated rules:

• Private institutions with annual tuition fees exceeding RM60,000 (Rs 12.17 lakhs) must register for SST.

• All higher education institutions and language centres teaching international students must register, regardless of turnover.

The new Malaysian tax regulations will continue to exempt services provided to Malaysian citizens if they fall under a certain fee threshold. Institutions making less than RM500,000 annually will remain exempt. 

The Finance Ministry stated the policy is intended to “strengthen the country’s fiscal position by increasing revenue and broadening the tax base without adding undue burden on the majority of Malaysians.”

However, stakeholders fear the measure may run counter to Malaysia’s goal of enrolling 250,000 international students by 2025, as outlined in the nation’s Education Development Plan (2015–2025).

The British Council, in a comment to The Pie News, warned that “the imposition of SST could well impact enrolments in UK transnational education (TNE) programs… and affect Malaysia’s attractiveness as a study destination, especially amongst students from developing countries who can be price sensitive.”

These UK-linked programs often run in partnership with Malaysian private institutions, which host large cohorts of international students. The Council urged British institutions to consult local partners for clarity and offered to connect them with professional tax advisors.

Malaysia has positioned itself as a hub for international education, particularly for students from South Asia, Africa, and Southeast Asia, with a strong focus on affordability, English-medium instruction and globally recognised degrees. The new tax could challenge that positioning in an increasingly competitive global education market.