The value added tax rate that is applicable to education sector in the UAE is usually 5%. The educational sector in the UAE shall see several evolution when it comes to the section of value added tax. This is because specific services and goods for now will be offered by academic institutions that will be subjected to value added tax at about 5%. Academic institutions shall possess qualms regarding VAT implications in the particular sector.

How the educational sector is considered under VAT in the UAE?

Any education-based services or services that are relevant to goods and services shall be rated as nil or zero. In case it is being offered by one of the following educational institutions that fall under the qualifying categories.

  • Higher educational and academic institutions that are accredited and funded by the local or Federal Governmental authorities
  • Preschools, nurseries and schools

This basically indicates that the particular institution shall not be charging value added tax on academic or educational services that they will provide and shall be recovering value added taxation that is being paid on relevant cost at the particular time of value added tax return file process 2020.

Lastly, any academic service that is being offered by any other entity shall not be listed in the above information. It shall automatically be subjected to value added tax percentage of 5%.For queries relating to VAT registration, return filing and all other accounting or auditing needs, you can reach out to GCC VAT Filings.

Is there registration required for qualified academic institutions?

This is a frequent question that is often asked by many and the answer is yes. In case the supply of educational institutions surpasses AED that is 375,000 by qualifying educational institutions, there is a registration that is needed under VAT. However, in case the particular institution is not offering a goods and service that is taxed up to five per cent, it can certainly apply for the registration exception. In case the registration exception is approved, it shall be able to relieve institutions from processing the filing of daily taxation returns. However, similarly the institutions shall be unable to recover the input taxation that has been incurred on the expense.

Are there exemptions to zero or nil rating of academic services that will be supplied by academic institutions that are qualified?

There are any supplies that are relevant to the educational service provision that are subjected to value added tax at a 5% rate despite they are being offered by the qualifying academic institution. It may include the following:

  • Clothing and uniforms that students would wear of the accredited academic institutions regardless of the fact they are being supplied by institutions which is a key part of the educational service.
  • Goods and services that are being supplied to the people that not yet enrolled in institution are included in the list
  • The beverages and meals supplied to the accredited institutions
  • The electronic equipment and devices that are used in the particular institutions
  • The extracurricular activities that are being held by the following institution that has fee that is an addition to the education services.
  • The membership supplies in the student organizations are included in the list as well.

In what is the goods and services supply relevant to academic services categorized under VAT?

In case a qualifying academic institution is providing services and goods which directly relates to education supply they might qualify when it comes to zero rating also. One of the good examples can be the digital and book reading material that is supplied by the qualification of education institutions which are directly relevant to curriculum being that is taught as well to qualify for the zero ratings.

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