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VAT in education sector

Basic Tax Information Bulletin- First Edition- the Education sector

FTA is determined to provide information regarding the taxation system to make people aware of their rights and obligations under the UAE Tax system. For that reason, they have launched an awareness campaign for the year 2020. In this campaign, the authority has taken steps to use diverse channels by which they can transfer the information to the public in an easy and efficient way for VAT in Education Sector.

Basic Tax Information Bulletin is a part of this campaign. The first edition was launched on 9th February 2020. This edition provides information regarding the tax treatment for the education sector. It explains how the Value Added Tax (VAT) is charged on different products and services related to this sector. Furthermore, it also provides details Registration, Tax Invoices, and Tax Recovery. One must note that the bulletin focuses on schools and nurseries.

Different VAT Categories and their implementation on the educational sector

As per the FTA’s official website, the Basic Tax Information Bulletin explains that the supply of educational services (including the supply of printed or digital reading material related to the recognized curriculum, among others) is zero-rated where both the curriculum and the educational institution are recognized by the competent federal or local government.

In the same document, it was also mentioned that the services of transporting students from home to the location of the educational institution and vice versa are exempt from tax.

Taking about the supplies which are considered as ‘standard-rated’ supplies are subjected to 5% VAT which are: uniforms; field trips that are not related to the curriculum; electronic devices; Supplies made to persons who are not enrolled in the educational institution; food and beverages; and goods/services provided by a business that is not an educational institution.

Registration, Tax Invoices, and Tax Recovery

In case the value of supplies that comes under ‘standard-rated’ and ‘zero-rated’ is higher than the mandatory registration threshold value, which is AED375,000 in the last 12 months or expected to exceed in the next 30 days, then the educational institution needs to register for VAT. Therefore, these educational institutions must issue tax invoices. Simplified tax invoice may be issued in two cases: when the supply is made to an unregistered recipient or the consideration for the supply made to a registered recipient is AED 10,000 or less.

A registered educational institution can file a VAT return. However, there are some items and services for which they can’t recover the VAT, such as certain entertainment services and purchased, leased, or rented motor vehicles that are present for personal use.

FTA’s Director General His Excellency Khalid Ali Al Bustani said: “The Authority is intensifying its efforts to help businesses comply with tax regulations and procedures. It regards them as strategic partners, and always strives to educate the private sector and prepare it to efficiently navigate the tax system.”

Bulletins related to other sectors will also be published by FTA soon. This is one of the important parts of FTA’s 2020 campaign fulfilling the target of providing tax awareness to each and every individual.

Click Here to download the complete document

Source: https://tax.gov.ae/

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