MCA: “Decision to impose SST on scholarships, education aids unfair, misguided”
By Bernie Yeo
AN MCA leader has criticised the Royal Malaysian Customs Department’s recent decision to impose a 6% Sales and Service Tax (SST) on scholarships, bursaries and tuition wavers in private and international schools.
Calling the move “misguided” and “fundamentally unfair”, its deputy president Datuk Dr Mah Hang Soon said the decision punishes students and educators who rely on financial aid, thus treating educational support as a taxable luxury.
AN MCA leader has criticised the Royal Malaysian Customs Department’s recent decision to impose a 6% Sales and Service Tax (SST) on scholarships, bursaries and tuition wavers in private and international schools.
Calling the move “misguided” and “fundamentally unfair”, its deputy president Datuk Dr Mah Hang Soon said the decision punishes students and educators who rely on financial aid, thus treating educational support as a taxable luxury.
For many B40 and M40 students, scholarships are the only pathway to quality education. Taxing these awards imposes an added burden on families already struggling with costs,” Dr Mah, who is also the MCA Education Consultative Committee chairman said.
“A student who receives a 50% scholarship on an RM62,000 annual fee still gets taxed RM3,720 based on the entire gross fee amount. That is both illogical and unjust.
“This policy worsens the financial pressure on young graduates, who must already deal with rising living costs, rent, National Higher Education Fund (PTPTN) or personal loan repayments, and even car loans just to survive after graduation. By taxing scholarships, the government is effectively taxing opportunity and ambition.”
Dr Mah said the Customs Department must clarify whether all scholarships and waivers are now treated as “selective discounts” that are subject to SST on the gross fee even if the student or staff pays significantly less or nothing at all, and if the logic will later apply to public awards for tertiary studies such as Public Service Department (JPA) scholarships or PTPTN loan waivers for First Class graduates.
“If yes, this sets a dangerous precedent. Beyond hurting local students, this decision undermines Malaysia’s ambitions to be a leading regional education hub, causing Malaysia to be less attractive compared to neighbouring countries that do not tax educational aid,” he warned.
“In short, this SST on scholarships by private education institutions threatens to reduce foreign student enrolment, affecting both private and public revenue and reputation.
“Worse still, it fuels brain drain. Top local students, including those in TVET and professional fields, might now prefer overseas scholarships and work opportunities, drawn by higher pay, better work-life balance, and no taxation on aid.”
Dr Mah said the Ministry of Finance and Customs Department need to immediately suspend SST on scholarships and waivers, adopt a net-fee-based tax model that taxes only actual payments, and engage education stakeholders to prevent future policies that hurt access to education.
“Malaysia should support, not sabotage, talent development. This SST must be reversed before more damage is done to students, families, and our global education reputation,” he added. ‒ Sept 5, 2025
“A student who receives a 50% scholarship on an RM62,000 annual fee still gets taxed RM3,720 based on the entire gross fee amount. That is both illogical and unjust.
“This policy worsens the financial pressure on young graduates, who must already deal with rising living costs, rent, National Higher Education Fund (PTPTN) or personal loan repayments, and even car loans just to survive after graduation. By taxing scholarships, the government is effectively taxing opportunity and ambition.”
Dr Mah said the Customs Department must clarify whether all scholarships and waivers are now treated as “selective discounts” that are subject to SST on the gross fee even if the student or staff pays significantly less or nothing at all, and if the logic will later apply to public awards for tertiary studies such as Public Service Department (JPA) scholarships or PTPTN loan waivers for First Class graduates.
“If yes, this sets a dangerous precedent. Beyond hurting local students, this decision undermines Malaysia’s ambitions to be a leading regional education hub, causing Malaysia to be less attractive compared to neighbouring countries that do not tax educational aid,” he warned.
“In short, this SST on scholarships by private education institutions threatens to reduce foreign student enrolment, affecting both private and public revenue and reputation.
“Worse still, it fuels brain drain. Top local students, including those in TVET and professional fields, might now prefer overseas scholarships and work opportunities, drawn by higher pay, better work-life balance, and no taxation on aid.”
Dr Mah said the Ministry of Finance and Customs Department need to immediately suspend SST on scholarships and waivers, adopt a net-fee-based tax model that taxes only actual payments, and engage education stakeholders to prevent future policies that hurt access to education.
“Malaysia should support, not sabotage, talent development. This SST must be reversed before more damage is done to students, families, and our global education reputation,” he added. ‒ Sept 5, 2025
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