FTA’s first Business Bulletin – Education Sector
The latest update for the region’s taxpayers has been released by the FTA this week. Each publication of these bulletins is expected to explain the tax treatment in a specific sector, with practical scenarios and examples.
As the Bulletins are issued as an infographic and written in a summarized format, thus reaching a larger audience, they ideally can be used for quick reference. In its first edition, the bulletin focuses on tax treatment for the education sector (schools, pre-schools, and nurseries).
Key takeaways from the bulletin
- 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 education services are zero-rated, the supply of goods or services directly related to the zero-rated educational service, or supply of printed or digital reading material related to the recognized curriculum is also zero-rated.
- Supplies made to persons who are not enrolled in the educational institution are standard rated
- Supply of membership in a student organization is standard rated
- Tax Invoice may not be issued where the supply qualifies to be wholly zero-rated and there are sufficient records to establish particulars of the supply.
- Educational Institutions making zero-rated, or standard-rated supplies are eligible for a full recovery of input VAT, except for blocked expenses such as entertainment expenditure, motor vehicle expenditure that are available for personal use.
- Where the educational institutions also provide exempt transportation only a proportion of that input VAT is recoverable.
- The supply of extra-curricular activities can be zero-rated only where these are offered without any additional fee. However, where a fee is charged, this fee will be subject to VAT.
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