As per the public clarification issued by FTA , the supply of educational services (Link: https://www.aviaanaccounting.com/vat-on-education-services/), including printed or digital reading material related to the recognized curriculum, is zero-rated, provided the curriculum and the educational institution are recognized by the competent federal or local government. Also, the services of transporting students from home to the location of the educational institution are exempt.
However, the supplies that are charged at standard-rate of 5% VAT include supplies made to persons who are not enrolled in the educational institution, uniforms, electronic devices, food and beverages, field trips that are not related to the curriculum.
Educational institutions making zero-rated and standard-rated supplies are required to register for VAT in UAE (https://www.aviaanaccounting.com/vat-registration-in-uae/ ), provided the value of their supplies exceeded the mandatory registration threshold of Dh375, 000 in the last 12 months, or is expected to exceed it in the next 30 days.
An educational institution may voluntarily register for VAT (link: https://www.aviaanaccounting.com/vat-consultants-in-uae/) if the value of its taxable supplies or taxable expenses incurred exceeded in the last 12 months or is anticipated to exceed in the next 30 days the voluntary registration threshold of AED 187,500. These institutions are, therefore, required to issue tax invoices for all supplies.
Simplified tax invoices ( link: https://www.aviaanaccounting.com/things-to-remember-while-generating-invoices-under-uae-vat-law/ )may be issued where the supply is made to an unregistered recipient or the consideration for the supply made to a registered recipient is AED 10,000 or less. However, as an exception, a tax invoice may not be issued where the supply qualifies to be wholly zero-rated.
Where an educational institution only makes zero-rated supplies (i.e. does not make any supplies that are subject to VAT at the rate of 5%), an exception from VAT registration may be applied for via the registration application.
Registered educational institutions are eligible to recover input VAT, except for “blocked” items, such as certain entertainment services, and purchased, leased, or rented motor vehicles that are available for personal use.
- The supply of extra-curricular activities can be zero- rated only where these are offered without any additional fee. When a fee is charged, it will be subject to VAT in UAE.
- The supply of food and beverages in the school canteen is subject to VAT.
- The supply of school uniforms is subject to VAT, irrespective of whether the uniforms are supplied as part of the supply of educational services.