VAT FAQs For Businesses Operating In The UAE Education Sector
It seems timely to talk about the VAT on the UAE education sector as the country has recently announced a major restructuring of the sector. At a time when the sector is undergoing renewed business focus, investors engaged in the industry must know relevant VAT rates applicable to the UAE education sector. Since education is one of the most lucrative sectors in the country, investors need to clarify doubts regarding the VAT treatment of the sector.
With this goal in mind, we have created a list of valuable FAQs on the VAT treatment of the education sector in the UAE. More details on the topic can be gathered from tax agents in Dubai, UAE. Meanwhile, go through the key VAT FAQs on Education Sector in the UAE:
1. Is VAT Chargeable on All the Supplies in the Education Sector?
No. As per the relevant regulations of VAT in the UAE, some supplies in the education sector are zero-rated and some others are exempt.
2. How is Education Treated under VAT in UAE?
Educational services and related goods provided by a qualifying institution will be treated as zero-rated as per the regulations of UAE VAT. The qualifying institutions are nurseries, preschools, schools, and higher educational institutions owned or funded by the Federal or local Government. Institutions treated as qualifying institutions for VAT purposes will not charge VAT on the educational services they provide.
Moreover, such institutions will be able to recover VAT paid on related costs at the time of VAT return filing in the UAE. Education services provided by any entity other than the qualifying institutions will be subject to VAT at the standard rate of 5%. VAT consultants in Dubai can help you to assess the tax rates on educational services and related goods.
3. Does an Educational Institution have to Register for VAT?
An educational institution is required to register for VAT if it is making only zero-rated and/or standard-rated supplies provided the value of its taxable supplies exceeds the mandatory registration threshold of AED 375,000. Such an institution can also apply for voluntary VAT registration in the UAE if the value of its taxable supplies and imports exceeds the voluntary registration threshold of AED 187,500. Institutions that only make zero-rated supplies can apply for an exception from VAT registration.
4. What are Zero-Rated Supplies in the Education Sector?
The Federal Tax Authority (FTA) will treat a supply of education services as zero-rated when both the curriculum and the educational institution are recognized by the competent federal or local government. In cases where the educational services are zero-rated, the provision of certain services provided by the same institution will also be treated as zero-rated. Such zero-rated services are given below:
- The supply of goods or services, given the supply, is directly related to the zero-rated educational service
- Supply of printed or digital reading material that is related to the approved curriculum
5. What are Exempt Supplies in the Education Sector?
Transportation of students from home to educational institutions and vice versa will qualify as exempt supply under VAT in the UAE. Tax agents in Dubai can advise the educators on exempt supplies.
6. What are Standard-Rated Supplies in the Education Sector?
The following are examples of standard-rated educational supplies as per VAT in the UAE:
- Any supply made to persons not enrolled in the educational institution
- Uniforms, electronic devices, food and beverages
- Field trips that have no direct connection with the curriculum
- Extracurricular activities that levy an additional charge
- Supply of student organisation memberships
- Goods/services provided by a business that is not an educational institution
7. Are Tax Invoices Required to be Issued?
A tax invoice must be issued for all standard-rated and zero-rated supplies in the education sector. Simplified tax invoices are allowed if the supply is made to an unregistered recipient or if the consideration for the supply made to a registered recipient is AED 10,000 or less. An exception can be made in cases where the supply qualifies to be wholly zero-rated and there are sufficient records to establish the particulars of the supply.
8. Can Educational Institutors Recover Input VAT?
Yes. Educational institutions can fully recover the input VAT provided that they make only zero-rated or standard-rated supplies. However, such institutions are not allowed to recover the input VAT on the following items that are classified as blocked items:
- Certain entertainment services
- Purchased, leased or rented motor vehicles that are dedicated for personal use
Consult with the Best Tax Agents in Dubai, UAE
Being a core sector, investors need to carefully assess their VAT liabilities related to the supplies of educational services and goods. Education service providers need to understand various VAT aspects such as tax rating of various services, input VAT recovery options, issuance of tax invoices etc. Tax agents in Dubai such as Jitendra Chartered Accountants (JCA) can help the educational service providers navigate the key tax requirements.
JCA is one of the leading VAT consultants in Dubai with years of exceptional experience. Our FTA-approved tax agent can help the business owners to deal with tax requirements such as VAT registration, VAT return filing, VAT deregistration etc. Consult with our VAT consultants today to ensure seamless VAT compliance in the UAE.