School and Nursery Fees Zero Rated For VAT

The Federal Tax Authority in UAE has revealed the final list of sectors that are exempt from VAT. Education and healthcare are - largely - included, however parents will be paying more indirectly...

The UAE is launching Value Added Tax (VAT) from January 1, 2018 and the Federal Tax Authority (FTA) has moved to end months of speculation on which industries and services will be zero rated for VAT.

Both education and healthcare goods and services will for the most part be zero-rated.

Private and public school education will be held at a 0% VAT rate. However, private higher education institutions will be subject to 5% VAT.

Read more: Schools will be hit by a more general rise in inflationary pressures

Pre-school or nursery education and any school trips within the curriculum or having an educational purpose are zero rated for VAT.

Parents, however, will have to pay more for school uniforms, stationery, electronic gadgets, after-school activities, recreational school trips and renting of school grounds.

According to Article 45, the "Supply of Goods and Services that is Subject to Zero Rate", sub-section 13 of the VAT Decree Law:

"The supply of educational services and related Goods and Services for nurseries, preschool, elementary education, and higher educational institutions owned or funded by Federal or local Government, as specified in the Executive Regulation of this Decree-Law.

As for healthcare, vaccinations are exempt from VAT. However, healthcare that is not preventive, and medicines and medical equipment not listed in the cabinet decision are subject to 5% VAT.

The UAE and Saudi Arabia will be the first to introduce VAT within the GCC, while other countries will roll it out in the next few years.


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