VAT – Supply of education services

Supply of Education Services – Zero Rated Supplies

Educational service is one of the important services and it is relevant for most of the residents in any part of the world. UAE Government being aware of that fact and realized the importance of supporting the education system in the country has considered the providing education services in UAE as zero rated supply (subject to certain conditions).

What are the relevant rules relating to supply of Education Services?

1. The supply of educational services shall be subject to the zero rate if the following conditions are met:

 Both “supply of educational services” and “supplier of the educational services” must be recognised by the federal or local competent government entity regulating the education sector where the course is delivered.

 Where the Supplier of educational services is a higher education institution, the institution is either owned by the federal or local government or receives more than 50% of its annual funding directly from the federal or local government.

2. A supply of Goods or Services made by educational institutions shall be zero-rated where the supply is directly related to the provision of a zero-rated educational service.

3. Printed and digital reading material provided by educational institution and which are related to the curriculum of an education shall be zero-rated.

Example: Spectrum School in Dubai is registered with Ministry of Education, UAE. As it is a registered school, it is a qualifying educational institution. Hence, Spectrum School will charge VAT at 0% (zero rate) on the tuition fees charged to students. Also, books provided as part of the course will also be subject to 0% of VAT.

The educational services provided by any institution other than the qualifying educational institutions will be subject to VAT @ 5%.
What are the exceptions to the above rule (Supply of these services may attract 5% VAT)?

a. Goods and Services supplied by the educational institution to Persons who are not enrolled in the educational institution.

b. Any Goods other than educational materials provided by the educational institution that are consumed or transformed by the students undertaking the educational service for the purposes of education.

c. Supply of uniforms

d. Electronic devices in relation to educational services

e. Food and beverages supplied at the educational institution including supplies from vending machines or vouchers in respect of food and beverages.

f. Field trips, unless these are directly related to the curriculum of an education service and are not predominantly recreational.

g. Extracurricular activities provided by or through the educational institution for a fee additional to the fee for the education service.

h. A supply of membership in a student organization.