Every individual basic need starts with their education. Every economy’s strength and development depend upon the excellence of the education system. Many countries aim to have a tax-free education system as it is necessary and fundamental to achieving growth and success.
As a prosperous nation, UAE has been working on relaxing its education system as they offer relief from VAT application in this sector. This initiative also supports the in-country value (ICV) in Dubai program.
Different clauses and regulations that apply to VAT on the Education sector in UAE:
- Those education institutes offering up to high school studies and are well known for offering government-approved curricula to their student bodies will be charged 0% VAT.
- The government should own those educational institutes that offer higher education; if not, they should be funded 50% by the government to fall in 0% VAT criteria.
- According to the clause, there are two acting authorities in the education system, one is the federal government, which is the Ministry of Education in UAE, and another local sector is regulated by Emirate authority. UAE VAT law is not applicable in the education sector, but it charges zero percent VAT on different conditions.
Following are some of the primary conditions:
- Its respective education institute is well known in the educational sector.
- The government sector recognizes the course outline offered by the educational institute.
If conditions, as mentioned earlier, are not fulfilled, then particular educational institutes will not apply to the zero percent VAT policy; however, they will be charged VAT at a specific standard rate.
Following are some specific detailed goods and services offered by educational institutes which are charged on a zero percent VAT policy.
- All tuition fees and handbooks, either printed or digitally provided material.
- Complete education system including schooling of nursery or pre-school, higher education.
- The 0% free VAT policy does not include school transportation and student accommodation.
Those goods and services which are charged by 5% standard VAT rate include:
- School uniforms, electronic equipment used in schools, and all food and beverages that are provided in the institute.
- All extracurricular activities and educational trips.
Following are some of the key points to look upon for VAT application in education sectors:
All standard VAT rates will be charged 5% to those who are receiving goods and services but are not enrolled in educational institutes; it is directed towards the staff and management system.
- All goods, excluding syllabus and stationery items that are supplied to educational institutes, will be charged VAT.
- All uniforms and clothes will be charged at standard VAT rates, while textbooks are omitted from this category.
- All other payments made while preparing identity cards and different art categories will be charged 5% VAT as these are not directly connected to educational services.
- Students paying membership charges and club fees all these types of payments will be charged at standard rates.
What value addition is offered by Books manager’s teams:
While our competitive team provides accounting and auditing services, including corporate tax management, VAT registrations, filings, and VAT compliances, our professionals make sure to offer complete guidance to all sectors and organizations. We are delighted to be a part of a growing successful educational system as our experts provide professional instructions to different educational systems.
We make sure to offer all guidance under one shadow to our clients looking for professionalism and success. To get more details, you can contact us through our online portal, where we are available 24/7 offering free telephonic consultations.