24 Jan 2018
Private UAE universities begin charging VAT
Private UAE universities begin charging VAT:
The implementation of the five per cent VAT (Value Added Tax) introduced by the UAE Government on January 1, is progressing smoothly at private universities, officials said.
Before VAT took effect, some parents had initially been confused if they would have to pay the tax on their children’s higher education because school tuition had been exempted or “zero-rated”.
Clarifying the situation, the Federal Tax Authority had said that institutions of higher education, such as universities, are not exempt from tax unless they are owned by the federal or local governments, or receive more than 50 per cent of their annual funding directly from the federal or local governments.
That means private universities have to charge and collect VAT on behalf of the government.
On Sunday, senior representatives from the higher education sector informed that the roll out of VAT has been largely seamless.
The vice-chancellor of The British University in Dubai (BUiD), said there had been “no issues” in the levying of VAT at the postgraduate establishment.
“The students were fully aware of VAT and they have accepted to pay it, which is a very straightforward and simple process,” he added.
The university has also posted a “VAT Announcement” on its website.
He said that the VAT is being applied on tuition, books and “everything”. He pointed out that in case the charges at BUiD are found to be exempt from VAT, the students will be refunded the VAT amount.
At Curtin University Dubai, “we have fully implemented VAT from the January 1 and all of our teams have been fully trained. We notified students well in advance so that there was no misunderstanding or misinformation”, one of the staff informed.
He also added: “The VAT is charged on the undergraduate and postgraduate tuition fees and on books, after deducting any bursary, financial aid or scholarship awarded to our students … For our registration fee and student service fee, we have adjusted the amount so that, inclusive of VAT, they remain the same as they were before VAT.”
He also pointed out that the university also “organises various profession development events, which include conferences, executive speaker masterclasses, student life and study abroad excursions, and open night lectures at minimal or no charge. These services are either VAT exempted or the VAT is absorbed by the university”.
For their part, students do not have to make any changes in the way they pay for fees.
“When students pay any fee to Curtin University Dubai, a tax invoice is issued, which clearly itemizes VAT and includes our VAT registration number.”
Other universities have also confirmed to the Arabic daily that they have started charging VAT for the second semester of the academic year, which is currently in process.
A senior accounting personnel at the American University of Dubai said VAT became applicable on all private-funded higher education institutions in the UAE in accordance with Article (4) of Article (40) of the Tax Code.
Another senior personnel at Falah University, said: “Once the student has settled on the subjects they want to register in for the semester, the fees will be calculated accurately, and with the calculation of the tax rate, an invoice will be handed over with the final amount and with the tax number.”
Nasser Al Muraqab, vice-president of administration affairs at University of Dubai, which is a fully-owned subsidiary of Dubai Chamber of Commerce and Industry, said though institutions funded more than 50 per cent by the government will not be taxed, other services provided by the university to students — including issuance of certificates, university ID cards and other non-tuition fees — will be taxed.
He added that the university has registered to apply for a tax number, and once that is received, it will begin taxing the non-tuition services provided to the students.