Double Tax Deduction Opportunity for Companies Empowering Malaysian Talent

bdo-income-tax-scholarship

Legislative Supplement (P.U.) (A) 252/2026: Income Tax (Deduction for The Sponsorship of Scholarship To Malaysian Student Pursuing Studies at Technical and Vocational Certificate, Diploma, Bachelor’s Degree or Professional Certificate Levels) Rules 2026


The rule was gazetted on 8 July 2026 effective from Year of Assessment 2026 onwards. This rule allows eligible companies in Malaysia to claim a double tax deduction when they sponsor scholarships for eligible Malaysian students.
 

1.    Who can sponsor the scholarship?

  • The sponsor must be a company incorporated under the Companies Act 2016 and tax resident in Malaysia.
  • The company must sponsor a student who is studying full-time.
  • The scholarship agreement must be signed between 1 January 2026 and 31 December 2030.


2.    Which students qualify?

  • The student must be a Malaysian citizen and must also be resident in Malaysia.
  • The student must be studying on a full-time basis.
  • The student must not have any source of income.
  • The total monthly income of the student’s parents or guardian must not be more than RM15,000.


3.    What types of courses qualify?

  • Technical or vocational certificate courses offered by a recognised institution.
  • Diploma or bachelor’s degree courses offered by a recognised higher education institution.
  • Professional certificate courses that are certified by a professional body.
✓    A recognised institution generally means an institution recognised by the Malaysian Qualifications Agency or the Skills Development Department.
✓    A recognised higher education institution includes institutions established under the Universities and University Colleges Act 1971, the Universiti Teknologi MARA Act 1976, or the Private Higher Educational Institutions Act 1996.


4.    What deduction can the company claim?

The company can claim a double deduction for certain scholarship-related expenses, such as:
  • payments required for the course of study, such as tuition fees or other course-related charges; and
  • education support and reasonable living expenses during the student’s study period.

The company must also submit a report to the Ministry of Higher Education about the scholarship agreement.


5.    What are the report requirements?

The report should include details such as:
  • the student’s information
  • the sponsored course
  • the institution where the student is placed, and;
  • the amount of sponsorship provided.


Are you considering this tax deduction?

BDO can assist companies in assessing their eligibility for the tax deduction, reviewing scholarship arrangements against the prescribed conditions, and advising on the supporting documentation and reporting requirements. 

By planning ahead, your organisation can invest in Malaysia's future workforce, unlock valuable tax benefits, and meet your compliance obligations wit1h confidence.