Effects of VAT on the Education Sector in the UAE

Education is one of the vital and common requirements of each person. Each country’s growth and wealth are based on the quality of education that it gives to its people. Understanding the significance of education, most nations give education services at no tax rates. Connect with VAT consultant services in order to know more about the effects of VAT on the education sector in the UAE.

According to the Federal law no.8 of 2017 Clause (13) of Article 45 on VAT with its executive regulations article 40, the complying with are the rules about the VAT implementation in the education sector –

• Education services provided by educational institutions above high school that have been in control of the government and give educational services according to the government recognized curriculum would be collected VAT at 0%.

• The education institutes giving greater education should be either held by the government or funded by over 50% of the government to qualify for 0% of VAT.

According to the clause, the government chosen here can be the federal government or the domestic government of the location where the educational units are located. The Ministry of education is the governing authority in the country which controls the education sector at a federal level whereas emirate-wise officials of relevant emirates control the education sector at the domestic level. In order to be particular, the country VAT rule does not describe the condition of education services such as the laws of other nations, rather, it outlines two prime requirements that should be completed to collect VAT at 0% on education services. These terms are mentioned below –

• In case the educational services are given by a determined education unit.

• In case the courses are held by the government.

When these terms aren’t completed then the educational services would be collected VAT at the standard rate and they would not qualify for the 0% VAT rate. In more simple terms when the educational services are given by the eligible educational unit, this would collect VAT at 0% rates.

Some Major Points to Note about the VAT Application in Education Sector in the UAE

• The normal VAT rate would be collected on the goods and services which has been supplied to the people who aren’t registered in the educational institutes.

• The norm VAT rate would be collected on the supply of goods that are banned from educational materials such as stationaries, notebooks, and more.

• Uniforms or any other dressing used in a school or educational institute are able to charge VAT at the standard rate.

• The collection of textbooks designed according to the sanctioned curriculum is taxable at zero rates.

• Extra payments or cost paid for preparations of ID cards, supply of art equipment or materials, and more, are taxable at the standard rate because it does not have any direct link with the educational services which are collected at 0% rates.

• Partnership costs gathered from the students regarding any community, clubs, and more, are to be collected VAT at the standard rate.

What We Know So Far on VAT Treatment for Education Sector in UAE

The UAE VAT rules say that VAT is implemented at the 0% rate to the supply of educational services and relevant goods and services for pre-school, nurseries, and higher educational units. A very intriguing statement is that there’s no connection to secondary education so unless the executive rules get it within the scope of the 0% rate, the supply of education services regarding secondary education would be subject to VAT at the standard rate.

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