If your company is planning to fund the education of staff, their children, or promising students in the community. A new gazette order makes this kind of support more rewarding at tax time.

Under the Income Tax (Deduction for Sponsorship of Scholarship to Malaysian Student Pursuing Studies at Technical and Vocational Certificate, Diploma, Bachelor's Degree or Professional Certificate Levels) Rules 2026, a Malaysian resident company sponsoring a qualifying scholarship can claim a deduction equal to twice the amount it spends.

The scholarship agreement must be signed with the student between 1 January 2026 and 31 December 2030. The student must be a Malaysian citizen resident in Malaysia, studying full time at technical and vocational certificate, diploma, bachelor's degree, or recognised professional certificate level, with no income of their own, and parents or guardian earning not more than RM15,000 a month combined.

The deduction covers institution fees and reasonable living and study costs throughout the course. Inland Revenue can disallow any portion it sees as unreasonable. Companies must report each sponsorship to the Ministry of Higher Education. Any amount later repaid by the student becomes taxable income for the company.

This rule takes effect from year of assessment 2026, a real incentive to invest in young Malaysian talent while managing your tax position wisely.

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