Federal Tax Authority Issues 'Basic Tax Information Bulletin' to Continue Raising Tax Awareness

The Federal Tax Authority (FTA) has launched the ‘Basic Tax Information Bulletin’ as part of its campaign for 2020, where it seeks to continue raising tax awareness and providing taxpayers with periodic and detailed tax information. 

In its first edition, the bulletin focuses on tax treatment for the education sector (schools, pre-schools, and nurseries) which explains that the supply of educational services (including the supply of printed or digital reading material related to the recognised curriculum, among others) is zero-rated where both the curriculum and the educational institution are recognised by the competent federal or local government. 

The bulletin also noted that services of transporting students from home to the location of the educational institution and vice versa are exempt from tax. On the other hand, the supplies that are considered ‘standard-rated’ and subject to 5% Value Added Tax (VAT) include: 

• Supplies made to Persons who are not enrolled in the educational institution; 
• uniforms;
• electronic devices; 
• food and beverages;
• field trips that are not related to the curriculum; and 
• goods/services provided by a business that is not an educational institution.

According to the bulletin, educational institutions making zero-rated and standard-rated supplies are required to register for VAT provided the value of their supplies exceeded the mandatory registration threshold of AED375,000 in the last 12 months, or is expected to exceed it in the next 30 days. These institutions are therefore required to issue Tax Invoices. Registered educational institutions are eligible for to recover input VAT, except for ‘blocked’ items, such as certain entertainment  services, and purchased, leased, or rented motor vehicles that are available for personal use. 

The bulletin also provided detailed examples on a number of transactions related to the basic education sector from a VAT perspective.