How VAT in UAE will affect the education sector

How VAT in UAE will affect the education sector

Services shall be taxable at 5 per cent even though provided by recognized educational institutions



By Staff Report

Published: Thu 9 Nov 2017, 10:25 AM

Last updated: Thu 9 Nov 2017, 7:35 PM

Under the VAT regulation, higher education institutes which are more than 50 per cent funded by the government, will not be charged VAT but the rest will be.
Khalid Al Bustani, director general of Federal Tax Authority, on Wednesday said the tourists in the UAE will also get refunds on the returns. He said the authority is working with the parties involved in the project and expected to be rolled out ahead of VAT implementation.
UAE residents to pay VAT on food, water, power 
Surandar Jesrani, partner and CEO, Morison MJS, said the education services shall be taxable at 0 per cent only if it is supplied by a recognised educational institution and offer recognised curriculum.
Recognition should be given by the education ministry or competent government entity.       
"In case of higher education institutions, the institution should be either owned by the Federal or local Government or receives more than 50 per cent of its annual funding directly from the Federal or local Government," he said.
Jesrani said a supply of goods or services provide by educational institutions directly related to above shall be zero-rated. 
"We expect tuition fees, study material for the curriculum, medical fees, registration fees, admission fees, exam fees would be 0 per cent," he said.
However following services shall be taxable at 5 per cent even though provided by recognized educational institutions: 
1. Goods & services supplied to persons who are not enrolled with the institute.
2. Any goods other than educational material provided which are not related to the curriculum of the educational institute.
3. Supply of School Uniforms as required by the educational institute.
4. Providing electronic devices irrespective of whether or not supplied as a part of educational services.
5. Foods & Beverages supplied at the educational institutions
6. Excursions or field trips unless directly related to the curriculum of the educational services.
7. Extracurricular activities provided by or through the educational institutions.
8. Supply of membership in a student organization.
 


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