Latest Basic Tax Information Bulletin issued by FTA
The FTA, Federal Tax Authority announced that education institutions on a higher level which make zero-rated or standard supplies, can recover their input tax, except the areas where recovery has been blocked. VAT applied on certain services, purchased vehicles or rented vehicles comes under input tax that has been blocked deliberately.
The FTA further noted that all education institutions on a higher level that are giving exempt supplies will be allowed to recover a small part of the incurred input tax.
This action of the Federal Tax Authority’s Basic Tax Information Bulletin concentrates on the treatment of tax in the higher education sector, mainly universities that are recognized by the local or federal government that regulates the education system. Higher education establishments can zero-rate services supplied according to the curriculum approved by the government. However, this can only happen if the establishment is the property of the government or receives more than fifty per cent of its yearly fundings from the local or federal government. This type of institute comes under the term, qualifying institution. It was also noted by the bulletin that the stock of digital and printed material that was related to the curriculum would be subjected to zero-rate.
The bulletin also announced that transportation being used to take students from their home to the educational institute and the other way round would not be liable to pay tax. However, students who have not registered under the higher education establishment are subjected to five per cent VAT. Moreover, as field trips, beverages, electronic devices, and food do not come under the curriculum, they are subject to five per cent VAT.
It was further elaborated by the bulletin that higher education establishments providing standard-rated and zero-rated supplies will need to register themselves for Value Added Tax if the taxable goods’ value exceeds the mandatory registration criteria of AED 375,000 within twelve months.
The FTA has released the Basic Tax Information Bulletin in its campaign to spread information, as it wishes to spread awareness about the system of tax.
It aims to give everyone an equal opportunity to learn more about tax in each sector. This will help citizens and businesses understand concepts related to executive regulations and tax laws.