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How VAT is Applicable for UAE Schools

How VAT is Applicable for UAE Schools

VAT has been a major topic of discussion among many business owners in UAE. Its impacts and its implementation require entrepreneurs to make adjustments to their own pricing and the existing rates for products or services. We have been closely following the turn of events related to VAT and its application in different industries throughout the UAE.

Schools form the foundation of any society. This is why we have covered the latest VAT news related to schools through this article.

The main educational services and related goods and services shall be zero rated, if supplied by “Qualifying Educational Institutions”

“Qualifying Educational Institution” means that the institution should either be owned by the UAE Government or be funded by the local or Federal Government. The funding should constitute at least 50% of accumulative annual funds. Beside this the educational institution should present the Recognized Curriculum approved with the local or Federal government.

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 by federal or local government.

This means that a “Qualifying Educational Institution” shall not charge VAT on the zero rated educational services they provide. Any educational services provided by other entities not listed above shall be subject to the standard rate (i.e. 5%).

Supplies that will be taxable even though provided by “Qualifying Educational Institutions” in the UAE

Federal Tax Authority provided with the clarification on what will be taxable and what will be exempted from 5% VAT in educational sector of the UAE.

TUITION FEE – 0%

REGISTRATION FEE – 5%

SCHOOL TRANSPORT – exempted

SCHOOL UNIFORMS – 5%

SCHOOL RECREATIONAL TRIPS – 5%

PAID AFTER-SCHOOL CLUBS – 5%

FOOD AND BEVERAGES – 5%

BOOKS & STUDY MATERIALS – exempted

  • Tuition Fees: Tuition fees and curriculum-related exam fees will be zero-rated.
  • Registration Fees: Registration fees are subject to VAT at the standard rate of 5%.
  • Books & Textbooks: Books, printed and digital reading material, which are directly related to the curriculum and supplied by the School to its student, will also qualify for zero-rating.
  • School Transport: Provision of school transportation from STS before and after school falls under ‘domestic passenger transportation’ and hence is exempt from VAT.
  • School Uniforms: School & PE uniforms are subject to VAT at the standard rate of 5%
  • School Field Trips: Trips, which are education and directly related to the curriculum are zero-rated. Trips arranged predominantly for recreational purposes, will be charged with VAT at the standard rate of 5%
  • Extra-Curricular Clubs & Activities: Paid after-school clubs, activities and ticketed events will be subject to VAT at the standard rate of 5%. Individual providers are responsible for informing you of any price changes. Extra-curricular activities supplied by school teachers free of cost, either during or after-hours, are zero-rated.
  • Food & Beverages: Food and beverages supplied by the School catering provider, including lunch vouchers, shall be charged with VAT at the standard rate of 5%

We realize that many of you may feel overwhelmed with the prospect of making changes and ensuring that VAT is adopted into the operations of your business. We have experts who have over 15 years’ professional experience in taxation and who can be of great help when it comes to VAT implementation, tax compliance and tax returns.

Many of our experts have worked in economies where VAT is already implemented successfully. This gives them deep knowledge of VAT and how it should be adopted by a business. Talk to us about concerns, questions and doubts related to taxes, the implementation of VAT and the effects it may have on your existing business, our experts will be very happy to answer all your questions and clarify all doubts.

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Contact our Tax Specialist for a Free Consultation: +971 55 147 9576
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