No VAT on school tuition fees and textbooks

There will be no valueadded tax (VAT) on school tuition fees and textbooks from January 1, 2018, giving a major relief to parents.

Similarly, there is no VAT on higher education fee provided by institutions owned by government or 50 per cent funded by the government, according to the Federal Tax Authority.

The UAE has the largest number of students studying in English-mediuum international schools with 602,800 enrollees, according to data recently released by ISC Research.

However, five per cent VAT will be levied on education fee for higher studies provided by private institutions.

Tax experts and industry executives believe that the five per cent VAT is one of the lowest rates in the world and unlikely to make any major impact on the consumers’ spending trends. The other education categories where VAT will be levied include school uniforms, stationery, electronic equipment, renting of school grounds for events, after school activities for extra fee and school trips for recreation or not within curriculum.

Moreover, student accommodation is included within the definition of residential accommodation, therefore the supply of student accommodation (other than the first supply of a new residential building) will be exempt from VAT. Educational institutions, which also supply accommodation to students, will be unable to recover VAT incurred on costs which directly relate to the provision of the accommodation.

— waheedabbas@khaleejtimes.com