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Education Sector

Value Added Tax Guide | VATGED1
June 2026











VAT Guide | Education | VATGED1 1

Contents
1. Glossary .............................................................................. 3
2. Introduction ........................................................................ 5
2.1. Purpose of this document .......................................................................... 5
2.2. Who should read this document? ............................................................. 5
2.3. Legislative references ................................................................................ 5
2.4. Status of the Guide ..................................................................................... 5
3. Supply of educational Services ........................................ 6
3.1. What is regarded as an educational Service? .......................................... 6
3.2. Place of supply of educational Services ................................................... 6
3.3. Zero-rating educational Services provided in the UAE ........................... 7
3.3.1 Qualifying Educational Institution ..................................................................... 7
3.3.2 Qualifying Curriculum ....................................................................................... 8
4. Goods and Services related to Qualifying Educational
Services .............................................................................. 9
4.1. Meaning of related Goods and Services ................................................... 9
4.2. Zero-rating of related Goods and Services ............................................... 9
4.3. Supplies that are excluded from zero-rating .......................................... 10
4.4. VAT treatment of specific types of supplies ........................................... 10
4.4.1. Application and registration fees .................................................................... 10
4.4.2. Events............................................................................................................ 11
4.4.3. Field trips ....................................................................................................... 11
4.4.4. Graduation events ......................................................................................... 12
4.4.5. Special needs support services...................................................................... 12
5. Other Goods and Services supplied by educational
institutions ........................................................................ 13
5.1. Accommodation ........................................................................................ 13
5.1.1. Student accommodation ................................................................................ 13
5.1.2. Staff accommodation ..................................................................................... 13
5.2. Distance learning and Electronic Services ............................................. 14



VAT Guide | Education | VATGED1 2

5.2.1. Place of supply of Electronic Services............................................................ 15
5.3. Fines and penalties ................................................................................... 16
5.4. Healthcare Services .................................................................................. 16
5.4.1. Educational institution operating a clinic ......................................................... 16
5.4.2. Educational institution leasing premises to healthcare providers .................... 17
5.4.3. Educational institution outsourcing healthcare Services to third parties.......... 17
5.4.4. Educational institution charging fees to students ............................................ 17
5.5. Retention of overpaid amounts ............................................................... 17
5.6. Transportation and leasing of school buses .......................................... 18
5.6.1. Supply of transportation Services................................................................... 18
5.6.2. Supply of a school bus ................................................................................... 18
5.7. Other Goods and Services ....................................................................... 18
6. Grant income and other funding arrangements ............ 20
6.1. Third-party Consideration ........................................................................ 20
6.2. Scholarships .............................................................................................. 20
6.3. Grants ........................................................................................................ 21
6.4. Research Services .................................................................................... 22
7. Input Tax recovery ........................................................... 23
7.1. General principles ..................................................................................... 23
7.2. Events ........................................................................................................ 24
7.3. Rental of buses ......................................................................................... 24
7.4. Staff accommodation ................................................................................ 24
8. Updates and Amendments .............................................. 26





VAT Guide | Education | VATGED1 3

1. Glossary
Consideration: All that is received or expected to be received for the supply of Goods
or Services, whether in money or other acceptable forms of payment.

Exempt Supply: A supply of Goods or Services for Consideration while conducting
Business in the UAE, where no Tax is imposed and the Input Tax related thereto is
not recovered, except according to the provisions of the VAT Law.

Goods: Physical property that can be supplied including real estate, water, and all
forms of energy as specified in the VAT Executive Regulation.

Government Entities: Ministries, government departments and agencies, authorities
and public institutions in the UAE, whether Federal or local, or any other entities
treated with the treatment decided for Government Entities, in accordance with the
decisions issued by the Cabinet for the purposes of implementing the provisions of the
VAT Law.

Input Tax: VAT paid by a Person or due from him when Goods or Services are
supplied to him, or when conducting an Import.

Person: A natural or legal person.

Qualifying Curriculum: Educational Services provided in accordance with a
curriculum recognised by the federal or local competent government entity regulating
the education sector where the course is delivered.

Qualifying Educational Institution: Entities recognised by the federal or local
competent government entity regulating the education sector where the course is
delivered. These can include nurseries, pre-schools and schools, or higher
educational institutions which are either owned by the federal or local government or
receive more than 50% of their annual funding directly from the federal or local
government.

Qualifying Educational Services: Services of delivering a Qualifying Curriculum by
a Qualifying Educational Institution.

Residential Building: A building intended and designed for human occupation,
including residential accommodation for students and school pupils, but excluding a
hotel apartment, services apartment or the like.



VAT Guide | Education | VATGED1 4

Services: Anything that can be supplied other than Goods.

Tax: Value Added Tax (VAT).

Tax Credit Note: A written or electronic document in which any amendment to reduce
or cancel a Taxable Supply and its details are recorded, including an Electronic Credit
Note, as the case may be.

Tax Invoice: A written or electronic document in which any Taxable Supply and its
details are recorded, including an Electronic Invoice, as the case may be.

Taxable Person: Any Person registered or obligated to register for VAT purposes
under the VAT Law.

Taxable Supply: A supply of Goods or Services for Consideration during the course
of Business by any Person in the UAE, and does not include Exempt Supply.

UAE: United Arab Emirates.





VAT Guide | Education | VATGED1 5

2. Introduction
VAT is a general consumption tax on the supply of Goods and Services, that applies
to most supplies which take place within the territorial area of the UAE.
2.1. Purpose of this document
This document contains guidance on the VAT treatment of various supplies of
educational and other related Goods and Services.
2.2. Who should read this document?
This document should be read by any Person involved in the supply of educational
Services.
2.3. Legislative references
In this Guide,
• Federal Decree-Law No. 8 of 2017 on Value Added Tax and its amendments is
referred to as “VAT Law”,
• Cabinet Decision No. 52 of 2017 on the Executive Regulation of the Federal
Decree-Law No 8 of 2017 on Value Added Tax, and its amendments, is referred to
as “VAT Executive Regulation”.
2.4. Status of the Guide
This Guide is not a legally binding document, but is intended to provide assistance in
understanding and applying the VAT legislation with regards to the supply of education
and related Goods and Services.

The information provided in this Guide should not be interpreted as legal or Tax advice.
It is not meant to be comprehensive and does not provide a definitive answer in every
case. Taxpayers should also consider other relevant policy documents published on
the FTA’s website, including the Taxable Persons Guide (VATGTP1).

This Guide is based on the legislation as it stood when it was published. Each Person’s
own specific circumstances should be considered.

The VAT Law and VAT Executive Regulation referred to in this document set out the
principles and rules relating to the supply of education. Nothing in this publication
modifies or is intended to modify the requirements of any legislation. This document
is subject to change without notice.



VAT Guide | Education | VATGED1 6

3. Supply of educational Services
3.1. What is regarded as an educational Service?
The term “education” is not defined in the VAT legislation. Hence, it is interpreted
based on the common meaning of the word, e.g. the process of teaching, training and
learning, especially in schools, colleges or universities, to improve knowledge and
develop skills.1 Educational Services, therefore, refer to Services delivered by an
educational institution, aimed at transferring knowledge as part of a structured
process, by delivering a curriculum. As further elaborated in this Guide, zero-rated
educational Services refer to Services delivered by a Qualifying Educational
Institution, aimed at transferring knowledge as part of a structured process, by
delivering a Qualified Curriculum.
The education sector consists of various role players, including nurseries, schools,
universities, colleges and training institutes.
The supply of Goods and Services made in the UAE by a Taxable Person is, generally,
subject to 5% VAT,2 except where the supply qualifies for zero-rating3 or exemption.4
Article 45(13) of the VAT Law, read with Article 40 of the VAT Executive Regulation,
allow certain educational Services and related Goods and Services to be zero-rated.
These zero-rating provisions are interpreted strictly and narrowly, and can only be
applied where all the conditions are met.
3.2. Place of supply of educational Services
Establishing the place of supply is essential to determine the VAT treatment. A supply
is within the scope of VAT if the place of supply is the UAE. Further details of the place
of supply can be obtained from the Taxable Persons Guide (VATGTP1). The place of
supply of Services is generally the Place of Residence of the supplier.5
However, the place of supply of educational Services is the UAE if the Services are
performed in the UAE.6 In this context, educational Services means a course of study,
or a lesson of instruction in any subject. This can include, but is not limited to,
educational seminars and recreational courses.

1 The Oxford Dictionary.
2 Articles 2 and 3 of the VAT Law.
3 Article 45 of the VAT Law.
4 Article 46 of the VAT Law.
5 Article 29 of the VAT Law.
6 Article 30(6) of the VAT Law.



VAT Guide | Education | VATGED1 7

Where an educational institution has multiple campuses, it must identify the campus
most closely connected to the supply. Where multiple campuses are located in the
UAE, the educational institution should ensure that VAT is correctly accounted for and
reported in the Emirate most closely connected to the education.
Where campuses are located within the UAE (including Free Zones such as Dubai
International Academic City, Dubai Knowledge Park and Masdar City) and outside the
UAE, the educational institution should consider which establishment is most closely
connected with the supply and, therefore, whether the supply is within or outside the
scope of VAT.
Where the place of supply of the educational Services is in the UAE, the supply would
not be eligible for zero-rating as an export of Services, even where such Service is
supplied to a Non-Resident who is not in the UAE at the time of the supply.7
Where an educational institution offers exchange programs with overseas institutions,
it must determine the place of supply on a case-by-case basis. For example, where
students from an overseas institution spend a term in the UAE, this would constitute a
supply by the UAE educational institution to either the student or the overseas
institution. The place of supply of the educational services for that term would be the
UAE.
3.3. Zero-rating educational Services provided in the UAE
To zero-rate educational Services provided in the UAE, the following two conditions
must be met.
3.3.1 Qualifying Educational Institution
The first condition is that the Services must be supplied by an educational institution
that is recognised by the federal or local competent Government Entity regulating the
education sector where the course is delivered.
These educational institutions include nurseries, pre-schools and schools, and higher
education institutions. Higher education institutions are only eligible if they are owned
by the federal or local government, or receive more than 50% of their annual funding
directly from the federal or local government. Where a higher educational institution
receives funding from more than one federal or local government source, the
aggregate amount received should be more than 50% in order to meet this condition.

7 Article 31(1)(a)(3) of the VAT Executive Regulation, read with Article 30(6) of the VAT Law.



VAT Guide | Education | VATGED1 8

The onus is on the educational institution to retain the relevant documentary evidence
that it is recognised, e.g. registration/licence issued by the relevant competent
authority, and proof of funding from, or ownership by federal or local government.
Other Persons supplying educational Services are not allowed to zero-rate their
Services.
3.3.2 Qualifying Curriculum
The second condition is that the educational Services must be provided in accordance
with a curriculum recognised by the federal or local competent Government Entity
regulating the education sector where the course is delivered.

Courses that are not provided in accordance with such curriculum do not qualify for
zero-rating. For example, the supply of executive education courses on leadership
which do not form part of a recognised degree or accredited curriculum would not
qualify for zero-rating. Another example is where a nursery is a Taxable Person and
does not have an age-appropriate curriculum recognised by the relevant competent
authority. In such case, the nursery would not be eligible to zero-rate their Services
and the tuition charged will be considered to include VAT at 5%.

Other examples of Services that are not regarded as Qualifying Educational Services
include:
• diplomas and non-degree courses,
• tutoring and home schooling provided by any Person that is not a Qualifying
Educational Institution, for example a private tutor,
• skills development courses offered by training institutions, and
• education management Services supplied as a separate supply by a third party,
such as overseeing the campus on behalf of another entity, the supply of lecturers,
assignment marking and other day-to-day operational support provided to a
Qualifying Educational Institution.

Zero-rating is an exception to the rules, and, therefore, the provisions should be
interpreted strictly and narrowly.




VAT Guide | Education | VATGED1 9

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:
• 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.

8 Article 40(2) of the VAT Executive Regulation.
9 Article 40(4)(c) of the VAT Executive Regulation.



VAT Guide | Education | VATGED1 10

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 11

Educational Institution should then issue a Tax Credit Note in respect of the standard
rated Tax Invoice for the application or registration fee, and issue a new Tax Invoice
for the zero-rated tuition.11
Registration fees charged to students who are already enrolled in a program qualify
for zero-rating, provided the fees are for an integral part of, and directly related to zero-
rated Qualifying Educational Services.
Where students leave the educational institution before the end of the academic year
or term, the educational institution may refund part of the registration or enrolment fee.
Where VAT was accounted for on the fee and a Tax Invoice was issued, the
educational institution should issue a Tax Credit Note for the amount refunded.
4.4.2. Events
Fees charged by a Qualifying Educational Institution for fund raising and similar events
will be subject to VAT where the event is not directly linked to, and integral to the
course of study. For example, an event to sell Goods (e.g. cakes) to raise funds for a
new library is not primarily carried out for the purposes of delivering the education.
The sale of the Goods would be subject to VAT, except where the sale is conducted
by and on behalf a non-Taxable Person, e.g. the parents of the students. However,
where the Goods are sold by a Taxable Person, e.g. a caterer, the supply would,
generally, be subject to VAT and the Taxable Person would be required to account for
the VAT.
This can be contrasted with a concert held by a school to showcase student
achievement and progress in music or the performing arts, and where this is part of
the Qualifying Curriculum. The sale of tickets to a ballet or musical recital that forms
part of the student’s examination under a Qualifying Curriculum would qualify for zero-
rating if it can be evidenced that the concert or event is directly linked to the provision
of education, e.g. where it forms part of a music student’s examination.
4.4.3. Field trips
Fees charged for a field trip by a Qualifying Educational Institution may be subject to
VAT at the zero-rate where the following conditions are met:12
• the field trip is directly related to the Qualifying Curriculum, and
• the field trip is not predominantly recreational in nature.
Where the field trip does not meet both conditions, the supply would, generally, be

11 Where the conditions in Article 59(3) of the VAT Executive Regulation are met, the Qualifying
Educational Institution is not required to issue a Tax Invoice for a wholly zero-rated supply.
12 Article 40(4)(f) of the VAT Executive Regulation.



VAT Guide | Education | VATGED1 12

subject to 5% VAT.
For example, a school may arrange a field trip to an art museum as students are
learning about art in class. Students are required to pay a fee to go on the field trip.
Assuming the trip is not provided for any other purpose, such as recreation, but is a
means to deliver the education, the additional fee paid by the student for the trip also
qualifies for zero-rating.
A field trip will be regarded as predominantly recreational where the main purpose of
the trip is to provide entertainment to the students, with no or limited link to the
curriculum of their course of study. For example, trips to waterparks and amusement
parks, or attending concerts or sporting events that are not linked to the Qualifying
Curriculum.
4.4.4. Graduation events
Where students are required to pay a fee on completion of a program to graduate from
a Qualifying Educational Institution (typically for the graduation ceremony and
certificate), the fee will qualify for zero-rating where it is linked to a Qualifying
Curriculum. This is on the basis that the fee is directly related to a Qualifying
Educational Service.
The provision of catering at such events will not change the nature of the supply,
provided that it comprises simple hospitality. For further information please refer to
VAT Public Clarification – Non-recoverable Input Tax – Entertainment Services
(VATP005).
4.4.5. Special needs support services
Qualifying Educational Institutions may charge an additional fee to provide support
services to students of determination and special needs. Where the special needs
support services are directly related to the delivery of the Qualifying Curriculum, these
qualify for zero-rating.
Such services can include academic support, speech therapy, occupational therapy,
behavioural support or other support services that are approved by a competent
authority, for example educational support Services supplied to persons of
determination in accordance with a curriculum recognised by the Ministry of
Community Empowerment, provided that Person supplying the Services is licensed
by that Ministry to supply such Services.





VAT Guide | Education | VATGED1 13

5. Other Goods and Services supplied by educational
institutions
Educational institutions (qualifying and non-qualifying) may provide a range of other
Goods and Services to students, and the institutions should determine the correct VAT
treatment thereof. Some commonly provided Services and their VAT considerations
are set out below.
5.1. Accommodation
Educational institutions often provide accommodation to students and staff. In some
cases, this may qualify as a supply of a Residential Building. A supply of a Residential
Building13 is exempt from VAT, but can in some instances qualify for zero-rating.
Further information on what qualifies as a Residential Building and the VAT treatment
thereof is set out in the Real Estate VAT Guide (VATGRE1).
Where additional Services or facilities are provided, the educational institution should
consider whether it is supplying a Residential Building or a serviced unit. The supply
of units with additional services constitutes a Taxable Supply at the Standard Rate of
5%.
5.1.1. Student accommodation
Educational institutions may provide additional services with the accommodation,
often for a single fee. The educational institution must consider whether it is making a
single composite supply or multiple supplies.
For example, where an educational institution makes available a shared lounge for
residents or cleans common areas of the campus, this will be regarded as closely
linked to and, therefore, part of a single composite supply of accommodation.
In contrast, the provision of components such as cleaning inside the rooms, laundry
facilities and catering would, generally, be considered a supply of a serviced unit. A
supply of a serviced unit is subject to VAT at the Standard Rate, regardless of whether
the supply qualifies as a single composite supply.14
5.1.2. Staff accommodation
Where an educational institution provides a Residential Building to staff for a charge
or a salary deduction (for example, in lieu of a living allowance), this would, generally,

13 Article 37 of the VAT Executive Regulation.
14 Article 4 of the VAT Executive Regulation.



VAT Guide | Education | VATGED1 14

be treated as an Exempt Supply, unless it qualifies for zero-rating. The educational
institution will also have to consider whether it is making a supply of a serviced unit
which is taxable at the Standard Rate.
Where a staff member is required to live in staff accommodation in terms of the
employment contract but there is no provision for a housing allowance, there is no
Consideration for a supply. Where the accommodation qualifies as a Residential
Building and is provided for no Consideration, the supply will not constitute a Deemed
Supply, and no Output Tax will be due.15 Where an educational institution provides a
serviced unit for no Consideration, it should consider whether it is making a Deemed
Supply.16
VAT incurred on costs related to the provision of residential accommodation will be
recoverable if the conditions set out in Article 53 of the VAT Executive Regulation are
met. For example, if staff are required to stay on campus due to the nature of their
duties, the costs will be treated as an overhead cost and subject to the normal VAT
recovery rules.
5.2. Distance learning and Electronic Services
It needs to be established whether the educational institution is making a supply of
Electronic Services as this can impact the place of supply and VAT registration
obligations.
For VAT purposes, certain supplies of distance learning qualify as “Electronic
Services”, meaning Services which are automatically delivered over the internet, an
electronic network, or an electronic marketplace.17 Home schooling courses which are
delivered electronically may also qualify as Electronic Services, for example pre-
recorded classes and automatic assessments.
Although a small degree of human intervention is acceptable to enable or complete a
supply, this intervention should not change the nature of the Service as being
essentially automated. For example, where an educational institution sends a student
a manually generated email with a link to access and download pre-recorded lectures,
this is treated as an Electronic Service since the human involvement of sending the
email is not sufficient to change the nature of the supply.
In contrast, if an educational institution provides distance learning where students
have the ability to interact with teachers or fellow students, or receive personal
support, the Services would not be regarded as Electronic Services, due to the degree

15 Article 12(2) of the VAT Law.
16 Article 11 of the VAT Law.
17 Article 23(2) of the VAT Executive Regulation.



VAT Guide | Education | VATGED1 15

of human involvement. The level of interaction between tutors and students plays a
crucial role in determining whether the Services will be regarded as “automatically
supplied” with minimum human intervention. As an example, a course that was
delivered electronically but which is assessed by a personal tutor who reviews the
exams and provides feedback, will not be regarded as an Electronic Service. This is
in contrast to an online multiple-choice assessment which is marked electronically.
Where elements of the educational Service are supplied electronically, (e.g. pre-
recorded lectures and online auto assessments/multiple choice questions) and other
elements are not (e.g. live lectures and discussion classes, tutor marked assessments
and live forums), the educational institution should determine whether the supply
constitutes a single composite supply or multiple supplies18 and apply the relevant
place of supply rules accordingly.

Where distance education does not qualify as an Electronic Service, the place of
supply rule under Section 3.2 would apply. In such instance, the location of the
supplier’s establishment most closely connected to the Service would be regarded as
the place where the Services were performed for purposes of Article 30(6) of the VAT
Law.
5.2.1. Place of supply of Electronic Services
Where an educational institution provides distance learning that qualifies as Electronic
Services, the place of supply is:19
• in the UAE, to the extent that the use and enjoyment of the supply is in the UAE,
and
• outside the UAE, to the extent that the use and enjoyment of the supply is outside
the UAE.
A Non-Resident educational institution that provides distance learning that qualifies
as an Electronic Service to students in the UAE, needs to consider its VAT registration
obligations in the UAE. Where the Services are used and enjoyed in the UAE, the
supply will be subject to VAT, which may create a VAT registration obligation for the
educational institution. Further details on Electronic Services can be obtained from the
E-commerce Guide (VATGEC1).

18 Article 4 of the VAT Executive Regulation.
19 Article 31(1) of the VAT Law.



VAT Guide | Education | VATGED1 16

5.3. Fines and penalties
An educational institution may charge fines and penalties, for example on late payment
of tuition fees or on damage to property. Fines and penalties imposed for contravening
the terms of an agreement or performing an unlawful act are, generally, not
Consideration for a supply, and are outside the scope of VAT.
In contrast, payments will be subject to VAT at the Standard Rate where they relate to
an administrative Service, even if they are referred to as a fine or penalty. The VAT
treatment should be assessed by reference to the specific facts. Further information
can be obtained from VAT Public Clarification - Treatment of Compensation-Type
Payments (VATP001).
5.4. Healthcare Services
Clinics or medical facilities may be made available on-site by educational institutions
for the benefit of students. The VAT treatment will depend on the specific facts. Some
common scenarios under which educational institutions are involved with medical
Services or suppliers, are set out below.
5.4.1. Educational institution operating a clinic
Where an educational institution operates its own clinics, it should consider whether it
is making a supply of healthcare Services which qualifies for zero-rating.
A supply of healthcare Services generally accepted in the medical profession as
necessary for the treatment of the recipient can qualify for zero-rating where the supply
is:20
• made by a healthcare body or institution licensed by the Ministry of Health and
Prevention or by any other competent authority. This means that the educational
institution’s clinic should hold the relevant licence,
• provided by a practitioner such as a doctor or nurse who is licensed by the Ministry
of Health and Prevention or by any other competent authority, and
• related to the wellbeing of a human being.
Charges to cover the expenses of maintaining a clinic and having medical staff and
opening and maintaining medical records of patients do not qualify as healthcare
services and are, therefore, subject to 5% VAT if charged by an educational institution
that is a Taxable Person.

20 Article 41(1) of the VAT Executive Regulation.



VAT Guide | Education | VATGED1 17

5.4.2. Educational institution leasing premises to healthcare providers
An educational institution may lease or make property available to third-party
healthcare providers. The educational institution will then be making a supply of
standard-rated Goods. VAT at 5% will apply to the rent or other fees charged by the
educational institution.
5.4.3. Educational institution outsourcing healthcare Services to third parties
An educational institution may engage a third-party provider to offer healthcare
Services to students. Where the third-party provider supplies healthcare Services
directly to the students, the third-party will need to determine the VAT treatment of its
supplies.
Where the third-party healthcare provider supplies healthcare Services to an
educational institution, the Service would be subject to VAT at the Standard Rate of
5%. This is on the basis that zero-rating of healthcare Services is limited to supplies
made to natural person recipients, i.e. students in this case. This will be the case even
where the educational institution makes an onward supply of zero-rated healthcare
Services to students. Please refer to VAT Public Clarification – Business-to-Business
Supplies of Healthcare Services (VATP016) for further details.
5.4.4. Educational institution charging fees to students
An educational institution may charge a fee for medical Services that may be provided
over the course of a term or year, for example, an annual medical fee payable by all
students. Where there is no direct nexus to the actual provision of healthcare Services
which are necessary for the treatment or wellbeing of the student, this will not qualify
for zero-rating, as this is not Consideration for healthcare Services. This will be
regarded as an administrative service.
Where an educational institution charges a fee to open a medical record (for example
to record the student’s vaccination history), this will also not qualify for zero-rating as
the Service is administrative in nature.
5.5. Retention of overpaid amounts
Students may make overpayments which are retained by the educational institution.
Generally, where VAT was accounted for on the fee as this was Consideration for a
Taxable Supply, no adjustment is required unless the payment is refunded to the
student.
The educational institution should consider whether the payment is compensatory in
nature and, therefore, outside the scope of VAT. This will be fact specific, and further



VAT Guide | Education | VATGED1 18

information can be obtained from VAT Public Clarification – VAT Treatment of
Compensation-Type Payments (VATP001).
5.6. Transportation and leasing of school buses
The VAT treatment of transportation Services differs from the supply of leasing a
school bus. As such, the educational institution should determine the nature of the
supply.
5.6.1. Supply of transportation Services
The supply of local passenger transport Services in a qualifying means of transport,
which includes a bus, is exempt from VAT.21 Where an educational institution acquires
such Services, it would expect not to incur VAT. The onward supply of such Services
to students will also be exempt. For example, where a school engages a third party
(who provides the vehicle and the driver and retains control over the vehicle) to
transport students to and from school, the supply will qualify for exemption.
5.6.2. Supply of a school bus
The supply of a qualifying means of transport which includes a bus designed or
adapted to be used for public transportation of 10 or more passengers can be zero-
rated. However, this does not apply to buses which are restricted to a specific category
of users, such as students. Therefore, the supply of a school bus is subject to VAT at
the Standard Rate of 5%. For further information, please refer to VAT Public
Clarification on Public Transportation (VATP007).
Where a driver and a school bus are provided, the educational institution will need to
consider whether it is receiving separate supplies of a driver and the bus, or whether
it is receiving a single supply of transport services, which includes the driver and the
bus.
Where an educational institution makes available its bus to other educational
institutions or third parties, it should consider whether it is making a supply of the bus,
which is standard-rated, or a supply of transport Services. This should be reviewed by
reference to the facts and the contractual position.
5.7. Other Goods and Services
Further examples of supplies which are subject to VAT at the Standard Rate include:
• sale of merchandise to students, alumni and third parties,
• a supply of staff to other educational institutions for a fee,

21 Article 46(4) of the VAT Law, read with Article 45 of the VAT Executive Regulation.



VAT Guide | Education | VATGED1 19

• rental services of electronic equipment such as laptops, and
• replacement of access cards.




VAT Guide | Education | VATGED1 20

6. Grant income and other funding arrangements
Educational institutions often receive grant funding and endowments to support their
activities. This section sets out the VAT considerations in respect of such income as
well as other funding arrangements common in the sector.
6.1. Third-party Consideration
Fees for educational Services may either be paid by the student or a third party, for
example the parent or guardian, employer or a local or foreign government. Third-
party Consideration does not change the nature of the supply made to the student.
Third parties may also agree to fund a number of student seats at the educational
institution. Where the funding is gratuitous and the third parties receive nothing in
return it will be treated as third-party Consideration for the supply of educational
Services to the students. The educational Services may then be zero-rated where the
conditions are met.
6.2. Scholarships
An educational institution may offer a full or partial scholarship which it funds. The
educational institution is effectively providing a discount to the student on their tuition
fees, and VAT, if applicable, is due on the discounted price.
Where an educational institution has accounted for VAT on fees which are
subsequently discounted, it should issue a Tax Credit Note to the student. For
example, a student pays an annual fee for a course which is subject to VAT at the
Standard Rate. Following the first term results, the educational institution offers a
partial scholarship to the student for the remainder of the year. A Tax Credit Note
should be issued for the value of the scholarship.
An educational institution may offer devices, equipment or materials to support
students in need. Where such items are offered to students for no Consideration, the
educational institution should consider whether it is making a Deemed Supply.22
Where a Deemed Supply is made, the educational institution must account for Output
Tax.
Where the educational institution awards a full scholarship on account of the student’s
merit, VAT incurred on related costs is treated as an overhead cost.
Where a third party pays for scholarships offered to students, this will be considered
third-party Consideration as per Section 6.1. Where the student receives a third-party

22 Article 11 and 12 of the VAT Law.



VAT Guide | Education | VATGED1 21

funded scholarship partway through the academic year, no adjustment to VAT
previously accounted for will be required i.e. no Tax Credit Note will be required. This
is on the basis that the supply remains made to the student.
6.3. Grants
The terms “grant” or “donation” are not determinative of the VAT treatment. What
matters is whether the payer receives a benefit that has a direct link to the payment.
The terms often refer to a sum of money freely given in return for which no specific
Goods or Services are received. Where the payment is not made for a supply received
by the grantor (or a Person connected to the grantor), the supply will be outside the
scope of VAT. For a payment to be outside the scope of VAT, it must be gratuitous
and the grantor/donor must not receive anything in return other than mere
acknowledgement or an insignificant token of gratitude.
To determine the VAT treatment, the educational institution should consider the
following:
• Where no benefit accrues to the grantor (or a Person connected to the grantor), the
payment will be outside the scope of VAT.
• Where some benefit accrues to the grantor (or a Person connected to the grantor),
but it is not an identifiable, direct or valuable benefit, the payment will be outside
the scope of VAT.
• Where an identifiable, direct or valuable benefit accrues to the grantor (or a Person
connected to the grantor), the payment will be regarded as Consideration for a
supply and subject to VAT. For example, a payment made in return for intellectual
property from research, or rights to commercially exploit the research, will be
regarded as Consideration for a supply. Furthermore, where a token of gratitude or
acknowledgement has a significant value, the payment will also be regarded as
Consideration for a Taxable Supply made by the educational institution.
• Whether an identifiable, direct or valuable benefit accrues to the grantor (or a
Person connected to the grantor) should be determined on a case-by-case basis.
For example, where an educational institution receives an endowment that is
conditional on naming a campus building on request of the grantor, this will
constitute a supply of promotional or advertising Services and be subject to VAT.
Grantors may impose certain conditions to the payment. For example, a request that
the funding is spent on a particular project (provided the grantor does not receive an
identifiable, direct or valuable benefit in return) or a requirement to provide a budget
or proof of how the funds were spent. The fulfilment of such conditions alone is not
regarded as providing the grantor a direct or valuable benefit, hence, the grant
received may still be outside the scope of VAT.



VAT Guide | Education | VATGED1 22

6.4. Research Services
Educational institutions often receive grants to undertake research. The VAT
treatment depends on the conditions related to the funding. In instances where specific
research is conducted for commercial reasons, the educational institution is regarded
as making a supply of Services for consideration.
The same would apply where the grantor receives an identifiable, direct or valuable
benefit in return for the funding. Examples of benefits that the grantor could receive
include shared rights to the intellectual property or the ability to exploit the outcome of
the research for a commercial application, e.g. the right to market or use a newly
developed product. Such a supply will be subject to VAT at the Standard Rate if the
place of supply is the UAE.
Educational institutions may also make their facilities available to other persons to
conduct research. This may, for example, include providing access to laboratories to
post graduate students at a private university. The making available of such facilities
constitutes a Service which is subject to VAT at the Standard Rate.




VAT Guide | Education | VATGED1 23

7. Input Tax recovery
7.1. General principles
An educational institution is entitled to recover Input Tax incurred on the purchase of
Goods and Services to the extent that the Goods and Services are used, or intended
to be used for making Taxable Supplies or supplies outside the UAE which would have
been considered taxable had they been made in the UAE.23
Input Tax that is directly related to an Exempt Supply or a non-business activity is not
recoverable.24 In addition, VAT is specifically blocked from recovery on certain costs,
for example entertainment expenses.25
Where an educational institution makes Taxable and Exempt and/or non-business
supplies, VAT recovery should be calculated by using an Input Tax apportionment
method. Further information on Input Tax apportionment can obtained from the VAT
Input Tax Apportionment Guide (VATGIT1).
Where an educational institution receives non-business income, for example grant
funding, VAT incurred on related costs will be irrecoverable. For example, an
educational institution incurs legal costs on an endowment. Assuming the endowment
is a freely given donation that is outside the scope of VAT, the VAT incurred on the
related legal costs will be irrecoverable.
For completeness, Input Tax recovery of Goods and Services acquired using the grant
funding follows the normal rules. Where grant funding is used to purchase laboratory
equipment for student use, the VAT will be recoverable if the educational institution
makes a Taxable Supply of education.
Where an educational institution acquires or imports a Capital Asset, it should consider
its obligations under the Capital Assets Scheme. For purposes of the Capital Assets
Scheme, a Capital Asset means a single item or combination of certain items where
the Business has incurred expenditure of AED 5,000,000 or more (excluding VAT) on
which VAT is payable and which has an estimated useful life equal to or longer than
ten years (or part thereof) for buildings, or five years for all other Capital Assets.26 The
use of the Capital Assets has to be monitored and adjusted over the period.27

23 Article 54 of the VAT Law.
24 Article 55(6)(b) of the VAT Executive Regulation.
25 Article 53 of the VAT Executive Regulation.
26 Article 57(1) of the VAT Executive Regulation.
27 Article 58 of the VAT Executive Regulation.



VAT Guide | Education | VATGED1 24

7.2. Events
Educational institutions may organise events for no fee which are intended to foster
the provision of education. Input Tax recovery on costs will depend on the nature of
the event.
Where the event is educational in nature, for example a National Day, cultural day
event, or a student showcase, costs incurred to organise the event, such as on décor
or food will be considered to be business expenses. Where an event is held to drive
student recruitment and retention and to promote the institution, the costs will be
considered to be a business expense.
VAT incurred on costs will be recoverable if it is directly related to an onward Taxable
Supply, subject to the normal rules and conditions.
At events where food and drinks are provided free of charge, the educational institution
should consider the nature and purpose of the event to assess whether the VAT
incurred on these costs is recoverable. Where the entertainment or hospitality
provided at the event constitutes an end in itself (e.g. an iftar or dinner event), it will
be regarded as the provision of entertainment. VAT incurred on the provision of
entertainment is not recoverable.28 For further details, see VAT Public Clarification -
Non-Recoverable Input Tax – Entertainment Services (VATP005).
7.3. Rental of buses
Where an educational institution acquires or leases a school bus it should expect to
incur VAT at the Standard rate of 5% where the seller is a Taxable Person as the bus
would, generally, not be regarded as a means of transport for zero-rating purposes
due to it not being intended to be used to provide public transport. Only buses or trains
which are designed or adapted to be used for the mass transport of individuals, without
being restricted to a specific category of users, qualify to be supplied at the zero rate.29
VAT recovery on the costs is subject to the normal rules. For example, if the school
bus is used by the educational institution to make an onward Exempt Supply of local
passenger transport Services, the VAT incurred on the acquisition of the bus (and
ongoing operation and maintenance costs) will be irrecoverable
7.4. Staff accommodation
The supply of residential buildings is, generally exempt, unless the unit is serviced.
Where residential accommodation is provided to staff for no charge, the educational

28 Article 53(1)(a) of the VAT Executive Regulation.
29 VAT Public Clarification – Public Transport VATP007.



VAT Guide | Education | VATGED1 25

institution will need to consider whether the VAT incurred on costs is recoverable.
VAT incurred by the educational institution will only be recoverable in the following
instances:30
• the accommodation was provided under a legal obligation as per the labour laws
in the UAE or Designated Zone,
• the educational institution can demonstrate the following:
o there is a contractual obligation or documented policy to provide staff
accommodation,
o it can be proven to be normal business practice in the course of employing
those people, and
o the staff accommodation is necessary for the employees to perform their roles.
• the supply of the Goods or Services is a Deemed Supply.


30 Article 53(1)(c) of the VAT Executive Regulation.



VAT Guide | Education | VATGED1 26

8. Updates and Amendments
Date of amendment Amendments made
June 2026 • First version