Impact of VAT on School Fees in the UAE

Posted on Nov 13, 2017

Impact of VAT on School Fees in the UAE

According to the new VAT law which is going to be implemented from 1st January 2018 in UAE, schools don't need to pay VAT, however there is still vulnerability with regards to private schooling foundations. It is still not clear as specialists say greater lucidity is required about how VAT is going to affect private schools and education sector.

UAE’s Federal Authority made it clear that as per UAE’s new VAT law - schools, nurseries, preschools, elementary education and higher educational institutions owned or funded by federal and local government won't be required to pay the new 5 percent value added tax (VAT) being presented in January as they will be treated as zero-rated, however overall impact on study material, education fees, uniforms, transportation is yet not clear but tax experts said that tuition based school charges from grade 1 to 12 to be taxed at a zero rate.

As indicated by a daily newspaper the Emarat Alyoum, Saeda Al Qayoumi, stated: "VAT on schools and kindergartens in the nation will be forced at a zero percent rate. So, schools and kindergartens don't have a privilege to expand their charges." She also added that details on VAT for colleges and other instructive organizations will be reported when the VAT law will be discharged, which is expected to be announced by the end of the current year.

David Daly, a Chartered Accountant in UAE said, “The direction we’ve been given all through the Federal Tax Authority seminars is that education would be zero-rated.” He also stated that we were uncertain about was whether tertiary would be zero-rated for public and standard-rated for private. As with any new law which is going to be introduced, there will be grey areas and there are probably some changes to be made," he said. "This is practically done however there will be little changes all over, and that is expected."

Tania Siddiqui, director of Masterminds Education, said nurseries would welcome a zero rate. It is also stated by her that schools will also be able to claim back VAT charges which are charged by their providers, suppliers but clear confirmation is yet to be announced by the authority but this is definitely indicating that there would be no impact of VAT on parents and schools.

Brendan Law, the superintendent of Cranleigh Abu Dhabi, said he still can't seem to get official affirmation of how the law would influence private schools but according to the information he has, it seems it is a positive news that tuition fees would be zero-rated. He added that a wide range of extra expenses would be liable to VAT similarly as retail outlets

A representative from Aldar Academies, who works for non-public schools in Abu Dhabi, asserted private schools would be zero-rated however confirmation is still pending on how other school expenses would be influenced.

Aldar Academies said that “We welcome this decision, given the importance of providing communities with an education that is both outstanding and affordable.”

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