There is hardly 45 days left for Value Added Tax to come into the picture. Still, there is so much uncertainty about the sectors included and exempted from the VAT. Even though the FTA(Federal Tax Authority) has released Article 45 and Article 46 which has complete information regarding the firms which comes under the VAT law.
Check: How to register your businesses for VAT in UAE
Now as per the latest update educational institutions seem to have been exempted from tax payment. But not all the educational institutions have been excused. Only nurseries, pre-primary schools, and high schools come under the exempted category(Article 46). Other than that, higher educational institutions, universities are supposed to pay the VAT. Not only government schools but also private schools come under the excluded list.
Nurseries and schools actually come under the zero-rated category. The products which are taxable but the tax rate is zero are called Zero rated supply. In other words, they don’t pay any tax but can avail the benefits associated. So the education sector excluded from the vat category comes under Zero rated category. Not in all the divisions in the education sector VAT is added there are few which comes under exempted category and some under zero rate category.
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Fees like tuition fees, books fees, examination fees, admission fees etc all the fees which are mentioned in the curriculum comes from 0 rated supply. Furniture, computers, books supplied to the schools as basic amenities in the school are exempted from the tax.
The facilities which are included in the 5% section are:
- Extra amenities provided other than the supplies mentioned in the curriculum will be charged 5%
- School uniforms are to be included
- Food and drinks provided at the campus will include tax
- Excursions, extracurricular activities etc comes under tax paying category
- Electronic gadgets, journals etc will be involved.
School fees is a hotly debated issue and it would determine the cost of living primarily. So having school fees in zero rate supply category would be a sigh of relief to all the parents as school fees are already costly and adding 5% VAT would make it go a bit higher. Having a basic education is most important to everyone and putting up VAT on it will not a good impact so considering all this the FTA has put VAT into the exempted category.