UAE VAT rules for education sector has always been a confusing topic. That stops now.
We are here to solve some of the common confusions with the VAT treatment in the education industry of the UAE.
Over our years filing VAT for our clients, we have often had to field questions from clients. This guide for UAE VAT rules for education will include frequently asked questions by universities, educational institutes, schools, nurseries & pre-schools.
Important: If you run an education institution in the UAE, you need to fully comply with the tax regulations in UAE like any other business.
Browse through these FAQ’s created especially for UAE VAT rules in Education sector:
1. Education services are zero rated, therefore I do not need to register my institutions for VAT.
False. Even if the education service provided by you may qualify to be zero rated, you have to still register for VAT. This sale is still taxable and needs to be disclosed in the return.
2. Do I need to raise a Tax Invoice?
Yes, you need to raise tax invoices for all standard rated or zero rated supplies. You may also have the option to raise a simplified tax invoice, if you meet the criteria.
3. Can I claim back all the VAT expenses in my business?
Claiming VAT on certain expenses are not allowable under the law, for example:
1) Certain entertainment expenses.
2) Purchased, leased or rented motor vehicles that are available for personal use.
You will also not be allowed to claim expenses which are related to exempt supplies. All other VAT related expenses that are made for business purposes are claimable.
4. We charge an application fee to the student before they enroll, is this zero rated as well?
No, at the time of charging the application fee, 5% VAT must be charged. At the time of charging, the application fee the applicant is still not a student of the institution.
5. Are field trips & extracurricular activities zero rated as well?
The treatment for both is different. If there are no additional charges for extra curricular activities, it can be treated as zero rated, otherwise 5% VAT must be charged. In the case of field trips it can be treated as zero rated only if it meets both the following requirements –
1) The field trip is directly related to the curriculum.
2) The field trip is not predominately recreational.
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6. We provide transport service to all our students, can we treat that as 0-rated?
No, this needs to be treated as an exempt sale. You also need to make sure not to claim any of the VAT on the expenses associated with these sales.
7. Do I need to charge VAT for the food provided in the Canteen?
Yes, VAT must be charged at 5% as this is clearly classified as a standard rated sale.
To avoid making some of the common errors when registering for VAT return click here.
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