The revised guidance provides detailed clarification on zero-rating conditions, taxable and exempt supplies, and input tax recovery for educational institutions.
The UAE’s Federal Tax Authority (FTA) has published an updated Education Sector VAT Tax Guide (VATGED1), providing detailed guidance on the VAT treatment of educational services and related goods and services.
The June 2026 guide explains the VAT treatment of supplies made by educational institutions, including tuition, accommodation, healthcare, transport, scholarships, grants and input tax recovery.
Zero-rating conditions
Educational services are generally subject to the standard VAT rate of 5% unless they qualify for zero-rating (0%).
To qualify, two conditions must be met:
- The service must be supplied by a Qualifying Educational Institution recognised by a competent federal or local government entity, such as nurseries, schools or government-owned or government-funded higher education institutions.
- The service must be delivered under a Qualifying Curriculum recognised by the relevant regulating government entity.
Educational services that do not meet these conditions, including private tutoring, skills development courses and executive leadership programmes, remain subject to 5% VAT.
Goods and services related to education
Goods and services that are integral and necessary to the delivery of a zero-rated educational service may also qualify for zero-rating.
Items that may be zero-rated include printed and digital reading materials, curriculum-related field trips that are not predominantly recreational, and extracurricular activities provided without an additional fee.
However, uniforms, electronic devices such as laptops, food and beverages, including vending machine sales, and predominantly recreational trips, such as visits to water parks, remain subject to 5% VAT.
VAT treatment of specific supplies
The guide also clarifies the VAT treatment of several common supplies.
Application and registration fees: Fees charged to prospective students are generally subject to 5% VAT. Where these fees are later offset against tuition after enrolment, a Tax Credit Note may be issued to adjust the supply to the zero rate.
Accommodation: Residential accommodation provided to students and staff is generally exempt from VAT. However, accommodation that includes services such as laundry, room cleaning or catering may be treated as a serviced unit and become subject to 5% VAT.
Healthcare: Medical services provided by licensed clinics or practitioners for student wellbeing may qualify for zero-rating, while administrative charges such as fees for opening medical records are subject to 5% VAT.
Transportation: Local passenger transport provided in a qualifying bus is exempt from VAT. The sale or lease of a specialised school bus, however, is subject to 5% VAT.
Distance learning: Automated Electronic Services involving minimal human intervention, such as pre-recorded lectures, are subject to specific place-of-supply rules. Interactive distance learning, including courses with live tutor feedback, follows the standard VAT rules for educational services.
Funding, grants and scholarships
The guide states that payments made by parents, employers or government sponsors do not change the VAT treatment of the educational supply.
Scholarships are treated as discounts on tuition fees, with VAT applying only to the discounted amount.
Grants and donations are outside the scope of VAT where they are provided gratuitously and the grantor receives no direct benefit. However, where the grantor receives a direct benefit, such as naming rights for a building or intellectual property rights arising from research, the payment is treated as consideration for a taxable supply and is subject to VAT.
Input tax recovery
Educational institutions may recover Input Tax to the extent that the costs relate to making Taxable Supplies, including zero-rated supplies.
Input Tax cannot be recovered where it relates to Exempt Supplies, such as local passenger transport or standard residential accommodation, or to non-business activities, including expenses funded through gratuitous grants.
The guide also confirms that VAT recovery is specifically blocked for certain expenditure, including entertainment expenses.
