10 years cut to 3: TAR UMT students pay the price for government's tax exemption U-turn

The problem is not simply that the government has cut the promised 10-year tax exemption for TARC Education Foundation (TEF) to three years. The deeper concern is that the Finance Ministry has attached new conditions that alter a tax framework which has supported affordable higher education for generations. In the end, it is students who will pay the price.

Earlier this year, the government publicly announced a 10-year tax exemption for TEF under Section 44(6) of the Income Tax Act 1967. But the Finance Ministry's approval letter, dated 23 June, confirms the exemption runs for only three years, from 1 January 2026 to 31 December 2028. This departs from the Prime Minister's public commitment and has understandably worried the university community and the public.

The shortened period is not the only issue. The new conditions attached to the approval change a framework that has stood for more than a decade.

When Tunku Abdul Rahman College became Tunku Abdul Rahman University College in 2013, the Higher Education Ministry required the establishment of TEF to take on the institution's assets and liabilities. Before that, the college itself held tax-exempt status, and the TARC Trust Fund and TARC Student Loan Fund were separately exempt under Section 44(6).

After TEF was formed, these arrangements were consolidated into a single framework, agreed by the Board of Directors, the trustees, the Education Ministry and the Inland Revenue Board. This was not a temporary fix or a political favour. It was a structure built to ensure proper governance while keeping Tunku Abdul Rahman University of Management and Technology’s (TAR UMT) education quality and affordability intact.

In 2021, the Inland Revenue Board told TEF its Section 44(6) approval would expire on 31 December 2025. TEF applied for an extension, was unsuccessful, and appealed to Prime Minister Datuk Seri Anwar Ibrahim.

When the Prime Minister visited TAR UMT in February this year, he announced that all education foundations approved under Section 44(6) would automatically receive a 10-year extension. The university and the public took this at face value.

The 23 June letter tells a different story. The exemption period has been cut to three years, and new conditions now apply. Only public donations qualify for exemption. Tuition fees, rental income and other legitimate educational revenue are excluded. TEF is barred from receiving foreign-sourced funds and must meet additional reporting requirements, or risk losing its approval.

This defeats the original purpose of the exemption.

TEF is not a profit-making body. Whether its income comes from donations, tuition fees or rental, every ringgit goes back into teaching, scholarships, student loans, campus development and educational facilities. None of it is distributed as profit.

If this legitimate educational revenue becomes taxable, the burden will not vanish. It will fall on the university's ability to keep education affordable, and hardest on students from middle- and lower-income families who rely on TAR UMT as an accessible path to higher education.

The government's long-standing support for TAR UMT was never a political favour. It came from a commitment to ensure capable students, regardless of financial background, could access quality and affordable higher education in Malaysia. That commitment should not be diluted by changing a framework that has served the nation well for years.

MCA's call to restore the original 10-year exemption is not a request for special treatment. It is a call to preserve a framework that has let generations of Malaysians pursue higher education at an affordable cost.

MCA urges the Prime Minister to honour the pledge he made in February: restore the original 10-year tax exemption under Section 44(6), and maintain the framework without conditions that alter its purpose. Supporting education means giving institutions certainty, and it means students should not become the unintended victims of shifting government policy.

Datuk Dr Mah Hang Soon

MCA Education Consultative Committee Chairman

MCA Deputy President

 

TAR UMT, Tax Exemption, Finance Ministry, Higher Education Ministry, MAC