VAT Not Applicable to Schools, Nurseries: UAE's Tax Authority

Published August 22nd, 2017 - 10:08 GMT
Students line up as they enter their classroom on the first day of the academic year for public schools in Dubai on September 27, 2009. (Karim Sahib/ AFP)
Students line up as they enter their classroom on the first day of the academic year for public schools in Dubai on September 27, 2009. (Karim Sahib/ AFP)

The upcoming value-added tax (VAT) will not be applicable to nurseries and schools, a senior official said on Monday. VAT will be introduced in the UAE from January 1 next year.

“By mid-2018, the VAT law will detail how the tax will impact the universities and educational institutions across the country,” Saeda Al Qaddoumi, an adviser at the Federal Tax Authority, said.

Al Qaddoumi said schools and nurseries can get tax refunds for supplies and services, furniture and computers.

Schools will not be allowed to raise fees over VAT.

“UAE firms will be able to register for VAT through the Federal Tax Authority’s website from mid-September,” said Khalid Ali Al Bustani, the director-general of the Federal Tax Authority.

While about 300,000-350,000 companies in the UAE will be impacted, the whole population of the country will be subject to the new tax system.

VAT is a consumption tax; thus, tax burden is expected to reflect on the prices and consumption. The impact of VAT on inflation and government revenue will vary depending on the proportion of consumption in the economy and how much of the consumption base is captured by VAT.

Al Qaddoumi said VAT will not be applicable to medicines and medical equipment. “A decision will be issued to detail all sort of medicines and equipments,” he noted.

Employees will not be paying VAT because they are not practicing an independent activity. 

Al Qaddoumi also noted that VAT is not applicable to exports to countries outside the GCC. “Exporters are entitled to refund any taxes imposed on exports or material used in manufacturing these exports,” he said.

Although the final list of exempt items is not yet out, Al Qaddoumi said that most food items will fall under the 5 percent VAT rate, including basic goods. Imported goods and services will also be taxed at 5 percent.

VAT will also be applicable to utility bills, as well as mobile and internet bills.

Businesses collecting VAT can register online and subsequently file returns on a regular basis using the government’s e-services.

By Abdulla Rasheed

 


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