Are school uniforms and books zero-rated?

Article 40 – Zero-rating Education Services 1. The supply of educational services shall be subject to the zero rate if the following conditions are met: 24 Article amended as per Cabinet Decision No. 100 of 2024. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 30 a. The supply of educational services is provided in accordance with the curriculum recognised by the federal or local competent government entity regulating the education sector where the course is delivered. b. The supplier of the educational services is an educational institution which is recognised by the federal or local competent government entity regulating the education sector where the course is delivered. c. Where the Supplier of educational services is a higher education institution, the institution is either owned by the federal or local government or receives more than 50% of its annual funding directly from the federal or local government. 2. A supply of Goods or Services made by educational institutions identified in Clause 1 of this Article shall be zero-rated where the supply is directly related to the provision of a zero-rated educational service. 3. Printed and digital reading material provided by educational institutions identified in Clause 1 of this Article and which are related to the curriculum of an education shall be zero-rated. 4. As an exception to Clause 2 of this Article, the following supplies shall not be zerorated: a. Goods and Services supplied by the educational institution referred to in Clause 1 that are made available to Persons who are not enrolled in the educational institution. b. Any Goods other than educational materials provided by the educational institution referred to in Clause 1 that are consumed or transformed by the students undertaking the educational service for the purposes of education. c. Uniforms or any other clothing which are required to be worn by the educational institution referred to in Clause 1, irrespective of whether or not supplied by the educational institutions as part of the supply of educational services. d. Electronic devices in relation to educational services, irrespective of whether or not supplied by the educational institution referred to in Clause 1 as part of the supply of educational services. e. Food and beverages supplied at the educational institution referred to in Clause 1, including supplies from vending machines or vouchers in respect of food and beverages. f. Field trips, unless these are directly related to the curriculum of an education service and are not predominantly recreational. g. Extracurricular activities provided by or through the educational institution referred to in Clause 1 for a fee additional to the fee for the education service. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 31 h. A supply of membership in a student organisation.

BASIC TAX INFORMATION BULLETIN Education Sector (Nurseries, Pre-schools, and Schools) 1. Who should read this flyer? - Nurseries/Pre-schools Schools 2. Is VAT chargeable on all the supplies in the Education Sector? No. Certain supplies in this sector are zero-rated and some others are exempt. a. Zero-rated supplies The supply of educational services is zero-rated where both the curriculum and the educational institution are recognized by the competent federal or local government. Where educational services are zero-rated, the provision of the following supplies by the same institution is also zero-rated: b. - Supply of goods or services where the supply is directly related to the zero-rated educational service; and - Supply of printed or digital reading material which are related to the recognized curriculum. Exempt supplies Services of transporting students from home to the location of the educational institution and vice versa are exempt. c. Standard-rated supplies VAT will be charged at the standard-rate on the following (among others): - Supplies made to persons who are not enrolled in the educational institution; - Uniforms, electronic devices, food and beverages; - Field trips which are not directly related to the curriculum; - Extracurricular activities provided for an additional charge; - Supply of membership in a student organization; and - Goods/services provided by a business that is not an educational institution. 3. Is there a need for institutions in the Education Sector to register for VAT? Educational institutions making only zero-rated and/or standard-rated supplies are required to register for VAT provided the value of their taxable supplies and imports exceeded in the last 12 months, or is expected to exceed in the next 30 days the mandatory registration threshold of AED 375,000. An educational institution may voluntarily register for VAT if the value of its taxable supplies and imports or taxable expenses incurred exceeded in the last 12 months, or is anticipated to exceed in the next 30 days the voluntary registration threshold of AED 187,500. Where an educational institution only makes zero-rated supplies (i.e. does not make any supplies that are subject to VAT at the rate of 5%), an exception from VAT registration may be applied for via the registration application. 4. Are tax invoices required to be issued? Yes, tax invoices are required for all standard-rated and zero-rated supplies. Simplified tax invoices may be issued where the supply is made to an unregistered recipient or where the consideration for the supply made to a registered recipient is AED 10,000 or less. However, as an exception, there is no need to issue a tax invoice where the supply qualifies to be wholly zero-rated and there are sufficient records to establish the particulars of the supply.

4. Goods and Services related to Qualifying Educational Services A supply of Goods or Services made by Qualifying Educational Institutions qualify for zero-rating where the supply is directly related to the provision of a zero-rated educational Service.8 4.1. Meaning of related Goods and Services A Qualifying Educational Institution may supply various Goods and Services to students. The Goods or Services are “directly related” if they are an integral part of the Qualifying Educational Services and necessary for delivering the education. For example, a Qualifying Educational Institution may supply lab materials for use by students enrolled in a science degree course that may be eligible for zero-rating. The lab materials are not regarded as an aim in themselves, but incidental to the supply of the Qualifying Educational Services. Therefore, the provision of these materials will be eligible for zero-rating.9 (See Section 4.3.) A Qualifying Educational Institution may supply various Goods and Services for a single price (e.g. inclusive tuition fees), where only some of the Goods and Services are related to the Qualifying Educational Service. The Qualifying Educational Institution should consider whether it is making a single composite supply or multiple supplies. For further information on single composite and multiple supplies, please refer to the Taxable Persons VAT Guide (VATGTP1). 4.2. Zero-rating of related Goods and Services As per Article 40 of the VAT Executive Regulation, the following are examples of supplies that qualify for zero-rating: • • • 8 9 Printed and digital reading material provided by Qualifying Educational Institutions related to Qualifying Educational Services. Field trips that are directly related to the Qualifying Curriculum, provided it is not predominantly recreational. Extracurricular activities provided by or through the Qualifying Educational Institution where no additional fee is charged, e.g. soccer training provided at a school for no additional fees. Article 40(2) of the VAT Executive Regulation. Article 40(4)(c) of the VAT Executive Regulation. VAT Guide | Education | VATGED1 9

BASIC TAX INFORMATION BULLETIN Higher Education Sector 1. Who should read this flyer? - Universities Higher Education institutions 2. Is VAT chargeable on all the supplies in the Higher Education Sector? No. Certain supplies in this sector are zero-rated and some others are exempt. a. Zero-rated supplies The supply of education services by Universities and Higher Education institutions is zero-rated if: - The institution is either owned by the federal or local government or receives more than 50% of its annual funding directly from the federal or local government (“qualifying institute”); and - The curriculum and the educational institution are recognized by the competent federal or local government entity. A qualifying institute may, subject to specific exclusions, also zero-rate the following: b. - The supply of goods or services where the supply is directly related to the zero-rated educational service; and - The supply of printed or digital reading material, which are related to the recognized curriculum. Exempt supplies Services of transporting students from home to the location of the higher education institution and vice versa are exempt. c. Standard-rated supplies VAT will be charged at the standard rate on the following (among others): - Supplies made to persons who are not enrolled in the higher education institution; - Electronic devices, food, and beverages; - Field trips which are not directly related to the curriculum; - Extracurricular activities provided for an additional charge; - Supply of membership in a student organization; - Rental of halls/auditorium; - Courses to employees of corporates which are not in accordance with the curriculum recognized by the competent federal or local government entity; and - Clothing required to be worn, for example laboratory coats, irrespective of whether or not supplied by the higher education institute as part of the supply of educational services. 3. Is there a need for institutions in the Higher Education Sector to register for VAT? Higher education institutions making zero-rated and standard-rated supplies are required to register for VAT if the value of their taxable supplies and imports exceeded in the last 12 months, or is expected to exceed in the next 30 days the mandatory registration threshold of AED 375,000. A higher education institution may voluntarily register for VAT if the value of its taxable supplies and imports or taxable expenses incurred exceeded in the last 12 months, or is anticipated to exceed in the next 30 days the voluntary registration threshold of AED 187,500. Where a higher education institution only makes zero-rated supplies (i.e. does not make any supplies that are subject to VAT at the rate of 5%), an exception from VAT registration may be applied for via the registration application. 4. Are tax invoices required to be issued? Yes, tax invoices are required for all standard-rated and zero-rated supplies. Simplified tax invoices may be issued where the supply is made to an unregistered recipient or where the consideration for the supply made to a registered recipient is AED 10,000 or less. However, as an exception, there is no need to issue a tax invoice where the supply qualifies to be wholly zerorated and there are sufficient records to establish the particulars of the supply.