The residents in the UAE will have to pay a 5 percent tax (VAT) on food, water, power and higher education from next year, an analyst said.
Girish Chand, director, MCA Management Consultants, said both Saudi and the UAE authorities have brought these categories under the VAT.
Khalid Al Bustani, director general of Federal Tax Authority said, that tourists in the UAE will also get refunds on the returns, adding that they are working with the involved parties in the project.
The higher education institutes which receive more than 50% funding from the government will not be charged, however the rest of the institutes will be.
Surandar Jesrani, partner and CEO, Morison MJS, said the education services shall be taxable at zero per cent only if it is supplied by a recognised educational institution and offer recognised curriculum.
Recognition should be given by the education ministry or competent government entity.
“In case of higher education institutions, the institution should be either owned by the Federal or local Government or receives more than 50 per cent of its annual funding directly from the Federal or local Government,” he said.
Jesrani said supply of goods or services provided by educational institutions directly related to the above shall be zero-rated.
“We expect tuition fees, study material for the curriculum, medical fees, registration fees, admission fees, exam fees would be 0 per cent,” he said.
However following services shall be taxable at 5 per cent even though provided by recognized educational institutions:
- Goods & services supplied to persons who are not enrolled in the institute.
- Any goods other than educational material provided which are not related to the curriculum of the educational institute.
- Supply of School Uniforms as required by the educational institute.
- Providing electronic devices irrespective of whether or not supplied as a part of educational services.
- Foods & Beverages supplied at the educational institutions
- Excursions or field trips unless directly related to the curriculum of the educational services.
- Extracurricular activities provided by or through the educational institutions.
- Supply of membership in a student organization.