The UAE Federal Tax Authority has published a new Education Sector Value Added Tax Guide outlining the VAT treatment of educational services, related supplies, accommodation, transport, healthcare, scholarships, grants and input tax recovery, while clarifying when the 0%, 5% and exempt VAT treatments apply.
The UAE Federal Tax Authority (FTA) has issued the Education Sector Value Added Tax Guide (VATGED1) on 29 June 2026, providing updated guidance on the application of Value Added Tax (VAT) to educational services, related goods and services, and other activities across the country’s education sector.
Zero-rated educational services
Under the guide, educational services qualify for the 0% VAT rate (zero-rated) only if two conditions are met. The services must be provided by a recognised nursery, pre-school, school, or a higher education institution that is government-owned or receives more than 50% of its annual funding from the government. In addition, the services must be delivered in accordance with a curriculum recognised by the relevant federal or local government authority responsible for regulating the education sector.
The guide also confirms that goods and services directly related to qualifying educational services are zero-rated where they are integral to the recognised curriculum. These include printed and digital textbooks and reading materials, laboratory materials, graduation certificates, and curriculum-related, non-recreational field trips.
Standard-rated supplies
Educational services that do not satisfy the qualifying conditions are subject to the standard 5% VAT rate.
Examples include professional or executive education programmes that do not lead to a recognised qualification, private tutoring or homeschooling provided by entities that are not qualifying educational institutions, and skills development courses offered by independent training institutes.
The guide further states that certain supplies made by educational institutions remain standard-rated, including school uniforms, electronic devices such as laptops and tablets, food and beverages supplied at educational institutions, and the supply or leasing of school buses that are restricted to student use.
Exempt accommodation and transport
The guidance explains that some education-related supplies are exempt from VAT, meaning no VAT is charged and related input VAT generally cannot be recovered.
These include local passenger transport provided to students, such as transport services operated by third-party bus providers, and general residential accommodation supplied to students. However, accommodation that includes additional services, such as in-room cleaning or catering, is treated as serviced accommodation and is subject to the standard 5% VAT rate.
Healthcare, distance learning and special needs support
The guide also provides clarification on several specialised services. Healthcare services provided by licensed on-campus clinics for the well-being of students are zero-rated, while administrative charges, such as fees for opening medical records, are subject to 5% VAT.
For distance learning, the FTA notes that automated electronic educational services, including pre-recorded courses with limited human involvement, are subject to the relevant place of supply rules and may be taxable depending on where they are used and enjoyed.
Additional fees charged for academic or behavioural support provided to Persons of Determination are zero-rated where the support forms part of a recognised curriculum.
Scholarships, grants and input tax recovery
According to the guide, scholarships are treated as a reduction in tuition fees, with VAT applying only to the remaining amount payable after the scholarship is deducted.
The guide also distinguishes between grants and donations. Funding provided without any identifiable benefit to the contributor falls outside the scope of VAT, while payments made in return for benefits such as promotional rights or intellectual property are regarded as consideration for a taxable supply.
On input tax recovery, the FTA confirms that educational institutions may recover input VAT incurred on expenses relating to taxable supplies, including zero-rated supplies. However, VAT attributable to exempt supplies, such as residential accommodation and local passenger transport, or to non-business activities, is generally not recoverable.
