How Tuitions In The UAE May Be Impacted By VAT
Educating your children in the UAE may get even more expensive.
27 August 2017
The Government of the United Arab Emirates declared that a 5% value added tax (VAT) will be added to goods and services in the country starting the 1st of January 2018.
And regardless of former announcements, some analysts predict that the Value Added Tax might also impact the education sector.
Senior tax advisor at one of the largest law firms in the Middle East, Shiraz Khan, said that some VAT treatment could be applied to specific education institutions or services.
Khan explained that even though the government declared that the education sector will be subject to VAT at zero rate, it is yet uncertain how some educational services that are subject to zero rate are defined.
Khan assumed that some education services will not benefit from the VAT zero rate, meaning that a distinction will be made between education stages, with some subject to 5% rate, and others to zero rate.
VAT treatments will also take in consideration whether the education institution is private or public. Moreover, Khan supposed that VAT treatments could be subjected to ancillary services; like canteens or transportation.
Sending one child to pre-school, primary, and secondary school in the UAE costs up to almost AED 530,000, excluding other ancillary fees, such as: books, uniforms, and school trips.
Adding up three years of university, the cost of one child’s education in the UAE leaps up to almost AED 1 million.
However, here’s the silver lining: the 5% VAT rate residents of the UAE will be facing is significantly low when compared to Singapore or Europe, in which the VAT rate is 19%.