Why Companies Should Pay for Employees to Further Their Study

Overview:

On 7 March 2022, the Malaysian government gazette the “Income Tax (Deduction for the Sponsorship of Scholarship to Malaysian Student Pursuing Studies at Technical and Vocational Certificate, Diploma, Bachelor’s Degree, Master’s Degree or Doctor of Philosophy Levels) Rules 2022 (P.U.(A) 49/2022).

The rules, which encourage talent development in Malaysia will allow the company to claim the double deduction for any qualifying expenditure incurred.

Key takeaways:

1) Who is eligible for the deduction?

2) Who is the “student”?

3) What is a qualifying expenditure?

4) Qualified Course provider

Summary of learnings:

1. Who is eligible for the deduction?

The company: -

- Which incorporated under Company Act 2016 and resident in Malaysia; and

- Which sponsors a scholarship to a “qualified student” pursuing a full-time course of study: and

- Which executes a scholarship agreement with a student on or after 1 January 2022 but not later than 31 December 2025.

2) Who is the “student”?

A student means an individual: -

- Who is a Malaysian citizen and resident in Malaysia;

- Who has no means of his own

- Whose parents or guardians’ monthly income does not exceed RM10,000.

- Who pursuing a full-time course of study

3) What is qualifying expenditure

Qualifying expenditures are: -

- payment required by relating to the course of study

- educational aid and reasonable cost of living expenses throughout the student’s period of study

4) Qualified Course provider

The course provider must be recognized by the

- Malaysian Qualification Agency or Skills Development Department; or

- Universities and Universities College Act 1971, University Technology MARA Act 1976 or the Private Higher Education Institutions Act 1996

Sources & Relevant Links:

-Income tax deduction for the sponsorship of scholarship rules 2022 (P.U.(A) 49)

https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/1718318/PUA49.pdf

-Malaysian Qualifications Agency

https://www.mqa.gov.my/pv4/index.cfm

- Universities and University Colleges Act 1971

https://www.utm.my/legal/files/2020/08/AUKU-PINDAAN-2019-BM.pdf

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