What will be the place of supply of educational services, when these are delivered electronically?

CA Rajiv HiraCA Rajiv Hira    27 May 2020
What will be the place of supply of educational services, when these are delivered electronically?

UAE VAT : What will be the place of supply of educational services, when these are delivered electronically

Applying the place of supply rules to educational services, delivered electronically can sometimes be confusing as these are covered in following two distinct sections in UAE Federal Decree-Law No. (8) of 2017 on Value Added Tax:

(a)   Article (30) Place of Supply in Special Cases, where place of supply for “educational or any similar services” shall be the place shall be where such Services were performed

(b)   Article (31) Place of Supply of Telecommunication and Electronic Services (which includes The supply of educational or entertainment broadcasts) shall be where these Services were used regardless of the place of contract or payment. 

Few points which can be helpful in differentiating:

1.  Services given by a person: Education, training, or a similar service delivered by a person over the internet or an electronic network (such as a Webinar, Zoom, Teams etc.) may not considered to be an electronically supplied service because an actual person is involved in the delivery.

2.  Services given through automated learning: Automated learning does not have human involvement and is therefore may be constituted under the category of electronically supplied services.

3.  Educational examination services : The place of supply for educational examination services, for example, marking or assessing completed examination papers, will depend on whether or not the service needs or involves any human intervention.

For example, may be classified as a digital service where a student must complete and submit an online examination paper which is automatically checked and scored by computer. But, if the service involves the examination paper being marked by an assessor, it may not be considered as a digital service.

Summary:

Type of service & VAT applicability:

  1. Distance learning using webinars etc. - Supplier’s place of establishment - Article 30 (UAE Federal Decree-Law No. (8) of 2017 on Value Added Tax).
  2. Automated learning (no human involvement) - Consumer’s address or residence - Article 31 (UAE Federal Decree-Law No. (8) of 2017 on Value Added Tax).

Note: This information is based on my personal interpretation, from references used. This content is for informational & knowledge sharing purposes only, and is not intended to provide, and should not be relied on for compliance, tax or accounting advice.

References Used:

a) VAT rules for supplies of digital services to consumers in the EU : https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers#place-of-supply-of-educational-services

b) Federal Decree-Law No. (8) of 2017 on Value Added Tax 

  • Article (30) Place of Supply in Special CasesAs an exception to what is stipulated in Article (29) of this Decree-Law, the place of supply in special cases shall be as follows: 

6.     For the Supply of any cultural, artistic, sporting, educational or any similar services, the place shall be where such Services were performed. 

  • Article (31) Place of Supply of Telecommunication and Electronic Services: For telecommunications and electronic Services specified in the Executive Regulation of the Decree-Law, the place of supply shall be: 

a. In the State, to the extent of the use and enjoyment of the supply in the State. 

b. Outside the State, to the extent of the use and enjoyment of the supply outside the State. 

The actual use and enjoyment of all telecommunications and electronic Services shall be where these Services were used regardless of the place of contract or payment. 

c) Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax

  • Article (23) Telecommunication and electronic services 

1. “Telecommunication services” means delivering, broadcasting, converting or receiving any of the services specified below by using any communications equipment or devices that transmit, broadcast, convert, or receive such service by electrical, magnetic, electromagnetic, electrochemical or electromechanical means or other means of communication, including: 

  1. Wired and wireless communications. 

  2. Voice, music and other audio material. 

  3. Viewable images. 

  4. Signals used for transmission with the exception of public broadcasts. 

  5. Signals used to operate and control any machinery or equipment; 

  6. Services of an equivalent type which have a similar purpose and function. 

2. “Electronic services” means Services which are automatically delivered over the internet, or an electronic network, or an electronic marketplace, including: 

g)    The supply of political, cultural, artistic, sporting, scientific, educational or entertainment broadcasts, including broadcasts of events; 

3. “Electronic marketplace” means a distribution service which is operated by electronic means, including by a website, internet portal, gateway, store, or distribution platform, and meets the following conditions: 

a.  Which allows suppliers to make supplies of electronic services to customers. 

b. The supplies made by the marketplace must be made by electronic means. 

 

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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