VAT on Education Supplies
The ‘Gulf Cooperation Council’ (GCC) states are gearing toward the introduction of a ‘Value Added Tax’ (VAT) in the region commencing on 1 January 2018. The proposed VAT will tax most goods and services with a limited number of specifically exempt or zero-rated supplies. VAT registered businesses that supply goods and services subject to VAT at a standard rate or zero-rate are usually entitled to claim a ‘credit’ for VAT paid on their business expenses (input VAT). However, in the case of a supply of exempt goods and services, no input tax credit will be available. Therefore the VAT cost will be borne by these businesses.
No. Certain supplies in this sector are zero-rated and some others are exempt.
a. Zero-rated supplies
The supply of educational services are zero-rated where both the curriculum and the educational
institutions are recognized by the competent federal or local government.
Where educational services are zero-rated, the provision of the following supplies by the same
the institution is also zero-rated:
– Supply of goods or services where the supply is directly related to the zero-rated
educational service; and
– Supply of printed or digital reading material which is related to the recognized curriculum
b. Exempt supplies
Services of transporting students from home to the location of the educational institution and vice
versa are exempt
c. Standard-rated supplies
VAT will be charged at the standard rate on the following (among others):
– Supplies made to persons who are not enrolled in the educational institution;
– Uniforms, electronic devices, food, and beverages;
– Field trips that are not directly related to the curriculum;
– Extracurricular activities provided for an additional charge;
– Supply of membership in a student organization; and
– Goods/services provided by a business that is not an educational institution.
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