VAT Implications for the Education Sector in the United Arab Emirates

From 1 January 2018, the United Arab Emirates (UAE) introduced a zero-rate VAT (0%) on education services, subject to certain conditions, and to related goods and services. This means that, where certain criteria are met, VAT will not be charged on such supplies; otherwise, the default 5% standard rate of VAT will apply. Many ancillary services connected with education are not taxable however, and therefore the provision of accommodation and transport to students by education providers could lead to restrictions on input tax recovery. This mixture of VAT liabilities, combined with complex funding arrangements, such as grants and sponsorship, presents many challenges around effective VAT management. As such, it is crucial that robust VAT processes are in place to ensure the correct VAT treatment is applied and the correct amount of input tax is recovered.

Deloitte has therefore designed a summary document for the VAT implications for the Education Sector in the UAE.