VAT inflates costs at private varsities
Parents in the UAE are relieved that the Value Added Tax (VAT) will not be implemented on school tuition, though, higher education institutions were not spared from the tax.
A five per cent VAT became applicable on all services provided by the private-funded higher education institutions in the UAE, meaning university students will have to pay tax on their fees. If more than 50 per cent of the institution is funded by the government, it will not be taxed.
What kind of an impact can a five per cent tax — which is considered the lowest in the world — have on families and independent students who survive from salary to salary and are on a very tight monthly or yearly budget?
For a Nigerian student in Dubai, Honour Chokote, 21, the tax is set to have a “drastic impact” on her family’s financial situation. Chokote’s family will be using her siblings’ fees to cover the tax on her fees. Her parents, who live in Nigeria, pay Dh48,000 annually for her university fees — which means a new total of Dh50,400, including tax (Dh2,400).
Even though that amount may not seem much for many, for Chokote’s parents, Dh2,400 is money they could use for her siblings’ fees. Chokote’s brother has taken off a semester from his university because of their financial struggles.
“My parents pay Dh118,600 for tuition, visa costs and my accommodation and I’m not adding other expenses. The tax is having a drastic impact financially because money that was set aside for my siblings will be cut to pay my fees,” she told Khaleej Times.
“If there is one thing that tax should not apply to, it is education. When you think about how much you spend on education and how much you could save without it, you tend to opt for alternatives.”
Shabnam Bashiri, an Iranian student in Dubai, will be taking up part-time jobs to help her parents pay off the additional costs of her fees that is being put on by the tax.
Bashiri had received a partial scholarship for her media communication studies, however, tax is still applicable on the annual Dh38,000 her parents pay on her tuition. “The tuition fee is around Dh50,000 annually, but with scholarship I pay around Dh38,000.
“The new VAT inclusive tuition fees has increased to Dh43,000 for my major, which will definitely make it a struggle, even with a scholarship. As college students, we’re always trying to save as much as possible. I’ll definitely have to get more part-time jobs to help my parents with the tuition fees,” she said.
“My university gave us the option to pay for spring semester only before January 1 in order to get a five per cent discount, which I know a lot of people did. But the rest of the year will be tax inclusive, so we’ll have to figure it out as we go.
“I hope universities will take into consideration that with everything being taxed now, it would really help if they provided more scholarships to students, or increased the discounts in the scholarships.”
If there is one thing that tax should not apply to, it is education. When you think about how much you spend on education and how much you could save without it, you tend to opt for alternatives.” Honour Chokote, Nigerian student
The new VaT inclusive tuition fees has increased to dh43,000 for my major, which will definitely make it a struggle, even with a scholarship. I’ll definitely have to get more part-time jobs to help my parents with the expenses.” Shabnam Bashiri, Iranian student