VAT Rates applicable to Education Sector in UAE

Anshika AgrawalAnshika Agrawal    25 June 2020
VAT Rates applicable to Education Sector in UAE

Education sector is one of the main sectors of UAE and, with the introduction of VAT in UAE from 1 January 2018, additional VAT is to be levied on certain good and services supplied by the educational institutions subject to certain conditions.

The main educational services and related goods and services supplied shall be zero rated, if supplied by any of the following ‘qualifying educational institutions’:

 • Nurseries, preschools and schools

• Higher educational institutions owned or funded (more than 50%) by Federal or local Government.

 This means that a ‘qualifying educational institution’ shall not charge VAT on the zero rated educational services they provide, and will be able to recover the VAT they pay on related costs when they file their tax returns

Please refer to the ready-reckoner for the rates below:

0%

  Exempt

5%

Tuition Fees

School transportation

Registration Fees

Books and Material (Printed and digital reading material provided)

Student accommodation

School uniforms

Printed and digital reading material provided by qualifying educational institutions

 

Electronic equipment

 

 

Food & beverages on campus or food vouchers

 

 

School trips for recreation

 

 

Food and beverages supplied at a ‘qualifying educational institution’ including supplies from vending machines or vouchers in respect of food and beverages.

 

 

 

Extracurricular activities for the fee additional to the fee for education service

 

 

 

 

 

 

 

 

 

 

For example: ABC school in UAE is registered under VAT. As it is a school, it is a qualifying educational institution. Hence, ABC school will not charge VAT on the tuition fees charged to students. Also, books provided as part of the course will also not be subject to VAT.

The educational services provided by any institution other than the qualifying educational institutions will be subject to VAT @ 5%

For example: A private college, XYZ Engineering College, is registered under VAT. Since this college is not a qualifying educational institution, the course fees charged by XYZ Engineering Collegewill be subject to VAT @ 5%. Also, the books and reading material provided by XYZ Engineering College will also be subject to VAT @5%.

However, note that certain services provided by educational institutions, even if they are qualified educational institutions, will be subject to VAT @ 5%, such as school uniforms, electronic equipment, food and beverages, field trips for recreation and extracurricular activities.

Also, the provision of transportation to students will be exempt, which means that the institutions will not charge VAT for providing school transportation. At the same time, they will not be able to recover VAT paid on related costs at the time of return filing.

For example: ABC School which is registered under VAT provides transportation to its students to and from the school. As school transportation is exempt under VAT, VAT will not be charged on the school transportation provided by ABC School. However, ABC School will not be able to recover VAT paid on related expenses, such as uniforms for the driver and conductors.

VAT treatment of student accommodation

Student accommodation is included within the definition of residential accommodation, therefore the supply of student accommodation (other than the first supply of a new residential building) will be exempt from VAT. Educational institutions which also supply accommodation to students will be unable to recover VAT incurred on costs which directly relate to the provision of the accommodation.

Therefore, educational institutions in UAE should carefully note the tax rates applicable to the services provided by them and accordingly conduct their business activities.

Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.

You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat, Excise, Customs, Corporate Tax, Transfer Pricing) for all GCC Countries in the Law Section of GCC FinTax. 

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