VAT on Educational Services in the UAE

The UAE introduced Value Added Tax (VAT) on 1 January 2018, with a standard rate of 5% on most goods and services. The main aim was to create a new source of government revenue and reduce reliance on oil income. Under this system, businesses charge VAT on their sales and can also recover the VAT they pay on their purchases.

When it comes to VAT on educational services in the UAE, the rules are slightly different. The UAE government has given special treatment to this sector to make sure learning stays affordable. For example, many core education services provided by qualifying institutions, like tuition fees, exams, and curriculum-related books, are zero-rated. This means no VAT is charged to parents, but schools can still claim back the VAT they spend on their costs.

On the other hand, some services, such as student transport, are exempt, which means no VAT is charged, but schools cannot recover the VAT they pay on related expenses. There are also cases where the standard 5% VAT applies, like on school uniforms, electronic devices (laptops, tablets), canteen food, and extracurricular activities that require extra fees.

What Is a “Qualifying Educational Institution”?

In the UAE, not every school or training centre automatically gets special VAT treatment. To fall under the zero-rated category, an institution must be considered a “qualifying educational institution.”

This includes:

• Nurseries and preschools
• Schools (primary and secondary)
• Higher education institutions such as colleges and universities

For an institution to qualify, it must meet two key conditions:

• It should be owned by the federal or local government or receive at least 50% of its funding from them.
• It must provide a recognised curriculum approved by the relevant authorities.

If these conditions are met, many of the services offered by the institution, such as tuition fees and curriculum-related materials, can be treated as zero-rated under VAT.

Zero-Rated VAT on Educational Services in the UAE

Zero-rated educational services are those where VAT is applied at 0%. This means the institution does not charge VAT on the service, but it can still recover any VAT paid on its expenses. To qualify, the service must be provided by a Qualifying Educational Institution (nurseries, preschools, schools, or higher education institutions that are licensed and recognised by the UAE authorities).

Examples of Zero-Rated Educational Services:

• Tuition fees for nursery, primary, and secondary education.
• Tuition fees for higher education programs (colleges, universities, and similar institutions).
• Educational services that form part of a recognised curriculum approved by the relevant authority (KHDA, MOE, ADEK, or similar).

Key Conditions:

• The institution must be licensed by the competent authority in the UAE.
• The service must relate directly to the delivery of the recognised curriculum.
• Additional services (like school transport, uniforms, or extracurricular activities) do not qualify as zero-rated and are usually subject to 5% VAT.

VAT Exempt Educational Services

Not all education-related services qualify for the zero-rated VAT category. Some are treated as exempt, which means no VAT is charged to parents, but at the same time, the institution cannot recover the VAT it pays on its related costs.

What Qualifies as Exempt:

• Services that are not directly connected to the recognised curriculum.
• Activities or offerings that go beyond the core purpose of education.

Examples of Exempt Services:

• Certain extracurricular activities (such as after-school clubs or hobby classes) if they are not an essential part of the curriculum.
• Student transport services (home-to-school and back).
• Student accommodation in dormitories or hostels.

Difference Between Zero-Rated and Exempt:

• Zero-rated services (0%): No VAT is charged, but the institution can still claim back the VAT it has paid on expenses.
• Exempt services: No VAT is charged, but the institution cannot reclaim input VAT on related costs, which could increase overall expenses.

Standard-Rated (Taxable) Educational Services in the UAE

Even when an institution is recognised as a Qualifying Educational Institution, not all of its supplies fall under the zero-rated category. Certain goods and services provided by schools, colleges, or universities are treated as standard-rated, meaning they are subject to 5% VAT.

Examples of Standard-Rated Educational Services:

• School uniforms and clothing (including sports kits).
• Electronic devices such as laptops, tablets, or calculators provided by the school.
• Canteen services, including food and beverages sold to students.
• Private tutoring or extra classes that are not part of the recognised curriculum.
• Extracurricular activities that are charged separately and not directly linked to the curriculum.
• Non-curriculum field trips (e.g., leisure outings).

Commercial Activities Run by Institutions:

If a school, university, or training centre operates commercial activities outside its core curriculum (e.g., renting out its facilities, hosting events, or selling non-educational products), those activities are also subject to 5% VAT.

This distinction ensures that only the essential, curriculum-based educational services benefit from zero-rating, while all other commercial or supplementary services are treated like standard business activities under VAT law.

VAT on Related Goods and Services

In addition to tuition and core education, many schools and universities provide related goods and services. These can fall under different VAT categories depending on whether they are part of the recognised curriculum or additional offerings.

1. Books and Printed Materials

Zero-rated if the books or learning materials are directly related to the approved curriculum. For example, textbooks and required reading materials supplied by the school are zero-rated.

2. Extracurricular Activities & After-School Programs

Usually standard-rated (5%), unless they are an essential part of the approved curriculum. For example, sports clubs, music lessons, or hobby classes offered for an extra fee.

3. Boarding School Accommodation & Meals

• Accommodation in student dormitories is generally exempt (like residential housing).
• Meals and food services provided separately (e.g., cafeteria, dining halls) are standard-rated (5%).

So, if the goods or services are directly tied to the formal curriculum, they may be zero-rated. Otherwise, they are either exempt or taxable at the standard 5% rate.

VAT Registration & Input Tax Recovery

Educational institutions in the UAE must carefully assess whether they need to register for VAT, as this directly impacts their ability to charge VAT and recover input tax.

Mandatory Registration:

An institution must register for VAT if the value of its taxable supplies (standard-rated + zero-rated) exceeds AED 375,000 in the past 12 months, or if it expects to cross this amount in the next 30 days.

Voluntary Registration:

Institutions can also register voluntarily if their supplies or expenses exceed AED 187,500. This can be useful for recovering input VAT on purchases.

Exemption from Registration:

If a school or university makes only zero-rated supplies (e.g., tuition fees, curriculum books), it may apply for an exemption from VAT registration. However, this comes with a trade-off: the institution will not be able to reclaim input VAT on its expenses (like utilities, equipment, or maintenance).

Input VAT Recovery Rules:

Institutions that are VAT-registered can reclaim input VAT on most qualifying purchases.

Exceptions:

• Costs related to exempt supplies (e.g., student transport, accommodation).
• Blocked expenses, such as entertainment services or vehicles used for personal purposes.

How Shuraa Tax Can Assist

VAT has a big impact on the education sector in the UAE, but the rules are designed to keep essential learning affordable. Tuition fees and curriculum-related books are usually zero-rated, while things like uniforms, meals, and transport are charged at 5% VAT. Some services, like extracurricular activities, may even be exempt. Knowing the difference helps schools, universities, and parents plan better and avoid surprises.

That said, VAT on the education sector in the UAE can sometimes feel confusing. This is where expert support makes all the difference.

At Shuraa Tax, we help schools and other educational institutions with everything related to VAT – from registration and filing to figuring out which services are zero-rated, exempt, or taxable. With our guidance, you can stay compliant, avoid penalties, and keep your operations stress-free.

Reach out to Shuraa Tax, and we’ll make it simple for you.

📞 Call: +(971) 44081900
💬 WhatsApp: +(971) 508912062
📧 Email: info@shuraatax.com

Commonly Asked Questions

1. Is there VAT on educational services in the UAE?

Yes. VAT applies differently depending on the type of service – some are zero-rated, some are exempt, and others are charged at the standard 5% rate.

2. Are school fees subject to VAT in the UAE?

Tuition fees charged by qualifying schools (nurseries, primary, secondary) are usually zero-rated if the school is licensed by the competent authority.

3. Is VAT charged on university tuition fees?

Yes, but if the university is a qualifying institution licensed by the Ministry of Education (MOE) or another authority, tuition fees are zero-rated.

4. Do parents pay VAT on school transport and uniforms?

School transport (home to school and back) is exempt from VAT. Uniforms are subject to 5% VAT regardless of the provider.

5. Are books and learning materials subject to VAT?

Books and printed or digital materials that are directly related to the official curriculum and supplied by a qualifying institution are zero-rated. Other materials not tied to the curriculum are subject to 5% VAT.

6. Are extracurricular activities subject to VAT?

Extracurricular activities offered for a separate fee are standard-rated (5%). If they’re part of the curriculum and offered without extra charge, they may be zero-rated.