Poojan Goyal

<p>Education is one of the major sectors for any economy. The education of country&rsquo;s youth decides how the economy of that country will flourish. Education promotes understanding, vision, creativity and productivity of people which helps in advancement of a country.</p> <p>UAE&rsquo;s government foremost priority is to provide low cost education to one and all. That&rsquo;s why education sector enjoy a lots of tax exemption as they are kept under Zero rated category. The most important thing is that education services and services related to education or higher education provided to the student is covered under VAT Zero rated list.</p> <p>As we all are aware that UAE has implemented VAT from 1st January 2018. It is on every person mind that it will affect either directly or indirectly their cost of living. Though most of the services related to education are kept under NIL rated but it would not be wrong to say that VAT will put some effect on parent&rsquo;s pocket and simultaneously it will also affect school profit if school authorities does not pass its effect on parents and this is sure that UAE government will not allow such practice. Going forward we will put light on each expense which would affect parents or educational institutions.</p> <p>UAE VAT laws simply states that the education services and related goods and services supplied shall be zero rated if supplied at nursery, preschool or school level.&nbsp; Higher education institutions owned by respected Federal or Local Government or more that 50% funded by them will also be under zero rated. This simply means that education services which are provided in accordance with the curriculum recognized by UAE government will be zero rated and all the services that are directly related to providing such zero rated will also be zero rated like books or any other related reading material. One more positive point is that transportation is kept under exempt category in VAT law, which will be a big relief to parents.</p> <p>But ones need to understand that in school, besides curriculum education there are lot more educational activities which will be going to be taxed @5%. Following are few items on which parents must bear 5% tax, which will definitely affect them:</p> <p>1) Any goods, other than educational materials provided by an educational institution&#39;, will be taxable;</p> <p>2) Uniforms or any other clothing will be taxable;</p> <p>3)&nbsp; Food and beverages supplied at an educational institution will be taxable;</p> <p>4) Field trips, unless these are directly related to the curriculum of an education service and are not predominantly recreational shall also be taxable.</p> <p>Although education is NIL rated but there are many other goods or services (as discussed above) which are necessity for a student but are taxable.</p> <p>One good thing done by UAE government is that they have kept education under Zero rated which will definitely help educational institutions. All the supplies which are consumed by Educational institutions, they must pay VAT @5%. After getting registered under FTA, they will be able to take refund of all the VAT they have paid to their suppliers. As we have mentioned in beginning about the negative impact of VAT on educational institutions, the transportation is kept under exempt category so educational institutions will not be able to take the credit of the VAT they have paid for such transportation facilities like VAT on spare parts or on fuel, which will definitely put some impact on the cost of educational institutions. &nbsp;</p> <p>To conclude, we understand that there will be effect of VAT on parents or educational institutions pocket, but such effect will be very less as compare to the relief given under UAE VAT law on education and we are thankful to respected UAE government for such a pocket friendly law. We hope &amp; wish education sector in UAE to flourish and the aim of UAE government to be accomplished for providing education to one &amp; all.</p>

VAT Impact on Education Sector

VAT Service