Is VAT charged on university tuition fees?

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 Higher Education Sector 5. Are institutions in the Higher Education Sector permitted to recover input VAT? Yes, a higher education institution making only zero-rated and/or standard-rated supplies are eligible for a full recovery of input VAT, with the exception of blocked items such as: - Certain entertainment services; and - Purchased, leased or rented motor vehicles that are available for personal use. However, where the higher education institution also renders exempt transportation services, only a portion of input VAT is recoverable. 6. Specific issues in the Higher Education Sector a. A higher education institute offers extra-curricular activities that are wholly related to the curriculum. Is this subject to VAT? The supply of extra-curricular activities can be zero- rated only when it is offered without any additional fee. However, where an additional fee is charged, this fee will be subject to VAT. b. Are supplies from vending machines subject to VAT? Yes, the supplies from vending machines are subject to VAT. The date of supply is the date on which the funds are collected from the vending machines. c. A higher education institute offers pick-up and drop-off facility for students. Are these services subject to VAT? No, transportation of students from home to a higher education institute and vice versa is exempt from VAT. d. Are supplies of foods and beverages in the canteen subject to VAT? If yes, what is the treatment for vouchers? f. Yes, the supply of foods and beverages in the canteen are subject to VAT. The supply of a monetary voucher for consideration up to the face value is disregarded for VAT purposes and the VAT liability crystallizes only upon redemption of the voucher. e. A higher education institute provides field trips to its students for an extra charge, can the higher education institute zero-rate supply? To classify a field trip as zero-rated, it should meet the following two conditions: - The field trip is directly related to the curriculum. - The field trip is not predominately recreational. If the field trip does not meet both of these conditions, then it will be subject to VAT at 5%. A higher education institute charges all new students an application/registration fee at the time of submitting the registration application and before they actually enrolled in the education institution, can this fee be zero-rated? No, the application/registration fees should be standardrated at 5% as the recipient is not considered enrolled in the higher education institute at the time of submitting the registration application. g. What is the VAT treatment of renting the grounds and conference halls in a higher education institute? The rental of grounds or conference halls in a higher education institute will be subject to VAT at 5%. h. A higher education institute conducts research for external entities and charges a fee for providing such services. Are such supplies subject to VAT? Yes, the research services conducted by a higher education institute for external entities are subject to VAT at 5%.

Other supplies related to the Qualifying Educational Services may also be zero-rated. Examples include: • • Re-registration of students that are already enrolled at the Qualifying Educational Institution. Support Services supplied to Persons of determination in accordance with a recognised curriculum. 4.3. Supplies that are excluded from zero-rating Though the following supplies may relate to the provision of educational Services, they are not eligible for zero-rating:10: • Goods and Services that are made available to Persons who are not enrolled in the Qualifying Educational Institution. • Goods other than educational materials that are consumed or transformed by the students undertaking the Qualifying Educational Service for the purposes of education. • Uniforms or other clothing which are required to be worn, irrespective of whether or not they are supplied by the Qualifying Educational Institution as part of the supply of Qualifying Educational Services. • Electronic devices, irrespective of whether they are supplied by the Qualifying Educational Institution as part of the supply of Qualifying Educational Services. • Food and beverages supplied at the Qualifying Educational Institution, including supplies from vending machines or of vouchers in respect of food and beverages. • Field trips, unless they are directly related to the curriculum of a Qualifying Educational Service and are not predominantly recreational. • Extracurricular activities provided by or through the Qualifying Educational Institution for an additional fee. 4.4. VAT treatment of specific types of supplies 4.4.1. Application and registration fees A Qualifying Educational Institution may charge an application or registration fee to prospective students. Goods and Services that are made available to persons who are not enrolled in the Qualifying Educational Institution are not eligible for zero-rating (see Section 4.2). Where such fees are charged in respect of Persons who are not yet enrolled in the institution, the supply is, generally, subject to 5% VAT. In some instances, where the application is successful, Qualifying Educational Institutions may set off the enrolment/registration fee against tuition. The Qualifying 10 Article 40(4) of the VAT Executive Regulation. VAT Guide | Education | VATGED1 10