INSERT INTO `tm_wsal_metadata` (`id`, `occurrence_id`, `name`, `value`) VALUES
(296647, 28420, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"712\" height=\"495\" /></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"640\" height=\"403\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296648, 28420, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n&nbsp;\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296649, 28420, 'MetaLink', 'content'),
(296650, 28420, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=8199&amp;action=edit'),
(296651, 28420, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n&nbsp;\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>|<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"712\" height=\"495\" /></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"640\" height=\"403\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296689, 28423, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"489\" height=\"340\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"480\" height=\"302\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296690, 28423, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"712\" height=\"495\" /></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"640\" height=\"403\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296691, 28423, 'MetaLink', 'content'),
(296692, 28423, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=8199&amp;action=edit'),
(296693, 28423, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"712\" height=\"495\" /></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"640\" height=\"403\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>|<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"489\" height=\"340\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"480\" height=\"302\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296731, 28426, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"410\" height=\"285\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296732, 28426, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"489\" height=\"340\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"480\" height=\"302\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296735, 28426, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"489\" height=\"340\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"480\" height=\"302\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>|<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"410\" height=\"285\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296773, 28429, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The General Data Protection Regulations (\"GDPR\") came into effect on 25 May 2018. The <a href=\"https://www.tamimi.com/law-update-articles/gdpr-a-plain-english-guide-to-the-implications-for-middle-east-marketing-activities/\">GDPR</a>, which replaced the EU’s Data Protection Directive of 1995, represents a significant expansion of personal privacy rights for EU residents.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The politically challenging task of escalating privacy protection from a directive to a binding regulation began in 2009 and involved protracted negotiations among the European Commission (the EU executive body) and its two legislative chambers, the Council of the European Union and the European Parliament. This was partially motivated by the desire for uniform protections for all EU residents and partially necessitated by the needs of regulated entities for consistent compliance requirements across the EU.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why should Middle East institutions pay attention to GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8219\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/8.jpg\" alt=\"\" width=\"456\" height=\"349\" />It is widely known that the GDPR has more enforceable legal status in comparison to the previous Data Protection Directive, and it is also substantively more robust in a number of significant ways. The most notable of these for entities located in the Middle East is that, unlike the Data Protection Directive (which mandated compliance by entities with a physical EU presence, such as a processing center or even a server), the GDPR’s coverage extends to entities with no physical EU footprint if they process personal data of EU data subjects residing in the EU. This limited extraterritoriality, while a significant expansion of the reach of EU law to entities outside the EU, does not attach to EU citizens abroad. As such, a Middle East entity involved in a data transaction with an EU resident in the Middle East, for instance, would not be subject to the GDPR; the same entity engaging in significant and intentional cyber-transactions with EU residents would be.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why education providers should pay attention to the GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Middle East-based Education institutions newly affected by the extraterritorial reach of GDPR are those that target distance education programmes to EU residents who are physically located in one of the member states. Such programmes were not initially subject to EU privacy law under the Data Protection Directive if they did not have infrastructure within the EU, but are now covered under the GDPR, even if they have no physical presence within the EU. However, Article 3 of the GDPR suggests that incidental transactions, such as the mere availability of goods or services via a website, are not automatic grounds for subjecting non-EU entities to the GDPR.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On the face of it, it is tempting to believe that Education institutions that enrol EU residents in the Middle East are entirely exempt from compliance with the GDPR. This would certainly be true for EU residents who initiate their admission application process from outside the EU. In the case where EU applicants start the admissions process from their home countries and obtain visas to enter the Middle East after gaining admission to eligible programmes, the GDPR will apply and such institutions would need to demonstrate compliance. In essence, active student recruitment campaigns targeting EU residents could subject the data collected from such students, whether via automated or non-automated means, to compliance requirements under the GDPR. It may take a few years for a more precise understanding of how the GDPR will be further defined, interpreted, and enforced by the EU and national data protection authorities of its member states. At such early stage, it is probably unlikely that the most expansive interpretation of the regulation’s extraterritorial application would be immediately enforced against non-EU entities. It is clear however that institutions with significant engagement with the EU, either in the form of physical presence or of distance-delivered services, should take immediate steps to ensure compliance with the GDPR.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Whose data does GDPR protect?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Personal data of all living individuals physically within the EU (\"EU data subjects\") are covered by the GDPR. The regulation makes no distinctions based on individual’s permanent places of residence or nationality. The GDPR applies to all such individual’s personal data, defined as any information that can be used to, directly or indirectly, identify a person. These include not only such obvious information as educational, financial, employment-related, and health data, but also photographs, personal phone numbers, and IP addresses.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">How should the education sector prepare for GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East should consider a number of action points as part of their GDPR compliance preparations as follows:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Review</strong>: A comprehensive review should be undertaken to determine (i) what personal data is currently held, (ii) how that data was acquired, and (iii) for what purpose it was acquired. Education providers should consider whether they have obtained and hold such personal data in accordance with the requirements of GDPR. If they have not, such data should be deleted, or consideration should be given as to how its continued storage / use may be rendered GDPR-compliant.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Privacy policies</strong>: privacy policies are a key element of the new regime. Education providers should review their existing privacy policies, and make all amendments necessary to bring them into line with the GDPR’s requirements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Consent</strong>: this is unlikely to be the most appropriate lawful basis for the processing of personal data by Education providers going forward. The GDPR requires that consent must be able to be withdrawn as easily as it is given and processing must immediately stop. Clearly, this is not practical given Education providers’ obligations to protect the safety and welfare of their students. Education establishments will need to look to other bases provided in the GDPR to ensure that their processing activities are lawful. This is a more complex legal question, and will be based on a case-by-case basis, the operation of the education provider in relation to the data.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Consent must be given for the processing or flow of personal data to third-parties, so in order to become GDPR compliant, education providers must be aware of where various pieces of data are going and why.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Security and Third-Party Agreements</strong>: a comprehensive, written information security programme should be developed and implemented to protect the security, confidentiality and integrity of personal data held. A review of arrangements with all third-parties engaged to handle, store or otherwise process personal data collected and/or stored by the institution should be undertaken. The GDPR requires all data controllers to have binding contracts with the parties that process data on their behalf. For education providers, it is important that all current service level agreements and other contracts with third-party suppliers are carefully reviewed and amended to ensure they are GDPR-compliant.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Supervisory authorities and penalties</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Under the GDPR, EU member states have to designate qualified supervisory authorities with specified oversight, investigatory, and enforcement powers to implement its requirements . These authorities will oversee compliance, provide consultation and prior approvals, and receive and administratively adjudicate complaints against controllers and processors. They can also impose fines of up to two percent of the global revenues for certain penalties, and up to four percent of such revenues for more serious ones.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Just as important as the supervisory authorities’ power to impose penalties is the consultative role they are assigned in reviewing mandatory data protection impact assessments that data controllers and processors must regularly perform in connection with high-risk processing activities prior to implementing them.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Conclusion</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">The GDPR took years to be adopted, and it may be safe to assume that it will take years before its real impact and practical compliance requirements become fully settled.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East with EU-based operations and those with significant numbers of EU residents as students — particularly those delivering distance education programmes to such students within the EU — should start to map out a strategy of implementing GDPR-compliant practices now.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>'),
(296774, 28429, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The General Data Protection Regulations (\"GDPR\") came into effect on 25 May 2018. The <a href=\"https://www.tamimi.com/law-update-articles/gdpr-a-plain-english-guide-to-the-implications-for-middle-east-marketing-activities/\">GDPR</a>, which replaced the EU’s Data Protection Directive of 1995, represents a significant expansion of personal privacy rights for EU residents.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The politically challenging task of escalating privacy protection from a directive to a binding regulation began in 2009 and involved protracted negotiations among the European Commission (the EU executive body) and its two legislative chambers, the Council of the European Union and the European Parliament. This was partially motivated by the desire for uniform protections for all EU residents and partially necessitated by the needs of regulated entities for consistent compliance requirements across the EU.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why should Middle East institutions pay attention to GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is widely known that the GDPR has more enforceable legal status in comparison to the previous Data Protection Directive, and it is also substantively more robust in a number of significant ways. The most notable of these for entities located in the Middle East is that, unlike the Data Protection Directive (which mandated compliance by entities with a physical EU presence, such as a processing center or even a server), the GDPR’s coverage extends to entities with no physical EU footprint if they process personal data of EU data subjects residing in the EU. This limited extraterritoriality, while a significant expansion of the reach of EU law to entities outside the EU, does not attach to EU citizens abroad. As such, a Middle East entity involved in a data transaction with an EU resident in the Middle East, for instance, would not be subject to the GDPR; the same entity engaging in significant and intentional cyber-transactions with EU residents would be.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why education providers should pay attention to the GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Middle East-based Education institutions newly affected by the extraterritorial reach of GDPR are those that target distance education programmes to EU residents who are physically located in one of the member states. Such programmes were not initially subject to EU privacy law under the Data Protection Directive if they did not have infrastructure within the EU, but are now covered under the GDPR, even if they have no physical presence within the EU. However, Article 3 of the GDPR suggests that incidental transactions, such as the mere availability of goods or services via a website, are not automatic grounds for subjecting non-EU entities to the GDPR.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On the face of it, it is tempting to believe that Education institutions that enrol EU residents in the Middle East are entirely exempt from compliance with the GDPR. This would certainly be true for EU residents who initiate their admission application process from outside the EU. In the case where EU applicants start the admissions process from their home countries and obtain visas to enter the Middle East after gaining admission to eligible programmes, the GDPR will apply and such institutions would need to demonstrate compliance. In essence, active student recruitment campaigns targeting EU residents could subject the data collected from such students, whether via automated or non-automated means, to compliance requirements under the GDPR. It may take a few years for a more precise understanding of how the GDPR will be further defined, interpreted, and enforced by the EU and national data protection authorities of its member states. At such early stage, it is probably unlikely that the most expansive interpretation of the regulation’s extraterritorial application would be immediately enforced against non-EU entities. It is clear however that institutions with significant engagement with the EU, either in the form of physical presence or of distance-delivered services, should take immediate steps to ensure compliance with the GDPR.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Whose data does GDPR protect?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Personal data of all living individuals physically within the EU (\"EU data subjects\") are covered by the GDPR. The regulation makes no distinctions based on individual’s permanent places of residence or nationality. The GDPR applies to all such individual’s personal data, defined as any information that can be used to, directly or indirectly, identify a person. These include not only such obvious information as educational, financial, employment-related, and health data, but also photographs, personal phone numbers, and IP addresses.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">How should the education sector prepare for GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East should consider a number of action points as part of their GDPR compliance preparations as follows:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Review</strong>: A comprehensive review should be undertaken to determine (i) what personal data is currently held, (ii) how that data was acquired, and (iii) for what purpose it was acquired. Education providers should consider whether they have obtained and hold such personal data in accordance with the requirements of GDPR. If they have not, such data should be deleted, or consideration should be given as to how its continued storage / use may be rendered GDPR-compliant.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Privacy policies</strong>: privacy policies are a key element of the new regime. Education providers should review their existing privacy policies, and make all amendments necessary to bring them into line with the GDPR’s requirements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Consent</strong>: this is unlikely to be the most appropriate lawful basis for the processing of personal data by Education providers going forward. The GDPR requires that consent must be able to be withdrawn as easily as it is given and processing must immediately stop. Clearly, this is not practical given Education providers’ obligations to protect the safety and welfare of their students. Education establishments will need to look to other bases provided in the GDPR to ensure that their processing activities are lawful. This is a more complex legal question, and will be based on a case-by-case basis, the operation of the education provider in relation to the data.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Consent must be given for the processing or flow of personal data to third-parties, so in order to become GDPR compliant, education providers must be aware of where various pieces of data are going and why.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Security and Third-Party Agreements</strong>: a comprehensive, written information security programme should be developed and implemented to protect the security, confidentiality and integrity of personal data held. A review of arrangements with all third-parties engaged to handle, store or otherwise process personal data collected and/or stored by the institution should be undertaken. The GDPR requires all data controllers to have binding contracts with the parties that process data on their behalf. For education providers, it is important that all current service level agreements and other contracts with third-party suppliers are carefully reviewed and amended to ensure they are GDPR-compliant.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Supervisory authorities and penalties</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Under the GDPR, EU member states have to designate qualified supervisory authorities with specified oversight, investigatory, and enforcement powers to implement its requirements . These authorities will oversee compliance, provide consultation and prior approvals, and receive and administratively adjudicate complaints against controllers and processors. They can also impose fines of up to two percent of the global revenues for certain penalties, and up to four percent of such revenues for more serious ones.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Just as important as the supervisory authorities’ power to impose penalties is the consultative role they are assigned in reviewing mandatory data protection impact assessments that data controllers and processors must regularly perform in connection with high-risk processing activities prior to implementing them.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Conclusion</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">The GDPR took years to be adopted, and it may be safe to assume that it will take years before its real impact and practical compliance requirements become fully settled.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East with EU-based operations and those with significant numbers of EU residents as students — particularly those delivering distance education programmes to such students within the EU — should start to map out a strategy of implementing GDPR-compliant practices now.</p>'),
(296775, 28429, 'MetaLink', 'content'),
(296776, 28429, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=8200&amp;action=edit'),
(296777, 28429, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The General Data Protection Regulations (\"GDPR\") came into effect on 25 May 2018. The <a href=\"https://www.tamimi.com/law-update-articles/gdpr-a-plain-english-guide-to-the-implications-for-middle-east-marketing-activities/\">GDPR</a>, which replaced the EU’s Data Protection Directive of 1995, represents a significant expansion of personal privacy rights for EU residents.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The politically challenging task of escalating privacy protection from a directive to a binding regulation began in 2009 and involved protracted negotiations among the European Commission (the EU executive body) and its two legislative chambers, the Council of the European Union and the European Parliament. This was partially motivated by the desire for uniform protections for all EU residents and partially necessitated by the needs of regulated entities for consistent compliance requirements across the EU.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why should Middle East institutions pay attention to GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is widely known that the GDPR has more enforceable legal status in comparison to the previous Data Protection Directive, and it is also substantively more robust in a number of significant ways. The most notable of these for entities located in the Middle East is that, unlike the Data Protection Directive (which mandated compliance by entities with a physical EU presence, such as a processing center or even a server), the GDPR’s coverage extends to entities with no physical EU footprint if they process personal data of EU data subjects residing in the EU. This limited extraterritoriality, while a significant expansion of the reach of EU law to entities outside the EU, does not attach to EU citizens abroad. As such, a Middle East entity involved in a data transaction with an EU resident in the Middle East, for instance, would not be subject to the GDPR; the same entity engaging in significant and intentional cyber-transactions with EU residents would be.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why education providers should pay attention to the GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Middle East-based Education institutions newly affected by the extraterritorial reach of GDPR are those that target distance education programmes to EU residents who are physically located in one of the member states. Such programmes were not initially subject to EU privacy law under the Data Protection Directive if they did not have infrastructure within the EU, but are now covered under the GDPR, even if they have no physical presence within the EU. However, Article 3 of the GDPR suggests that incidental transactions, such as the mere availability of goods or services via a website, are not automatic grounds for subjecting non-EU entities to the GDPR.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On the face of it, it is tempting to believe that Education institutions that enrol EU residents in the Middle East are entirely exempt from compliance with the GDPR. This would certainly be true for EU residents who initiate their admission application process from outside the EU. In the case where EU applicants start the admissions process from their home countries and obtain visas to enter the Middle East after gaining admission to eligible programmes, the GDPR will apply and such institutions would need to demonstrate compliance. In essence, active student recruitment campaigns targeting EU residents could subject the data collected from such students, whether via automated or non-automated means, to compliance requirements under the GDPR. It may take a few years for a more precise understanding of how the GDPR will be further defined, interpreted, and enforced by the EU and national data protection authorities of its member states. At such early stage, it is probably unlikely that the most expansive interpretation of the regulation’s extraterritorial application would be immediately enforced against non-EU entities. It is clear however that institutions with significant engagement with the EU, either in the form of physical presence or of distance-delivered services, should take immediate steps to ensure compliance with the GDPR.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Whose data does GDPR protect?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Personal data of all living individuals physically within the EU (\"EU data subjects\") are covered by the GDPR. The regulation makes no distinctions based on individual’s permanent places of residence or nationality. The GDPR applies to all such individual’s personal data, defined as any information that can be used to, directly or indirectly, identify a person. These include not only such obvious information as educational, financial, employment-related, and health data, but also photographs, personal phone numbers, and IP addresses.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">How should the education sector prepare for GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East should consider a number of action points as part of their GDPR compliance preparations as follows:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Review</strong>: A comprehensive review should be undertaken to determine (i) what personal data is currently held, (ii) how that data was acquired, and (iii) for what purpose it was acquired. Education providers should consider whether they have obtained and hold such personal data in accordance with the requirements of GDPR. If they have not, such data should be deleted, or consideration should be given as to how its continued storage / use may be rendered GDPR-compliant.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Privacy policies</strong>: privacy policies are a key element of the new regime. Education providers should review their existing privacy policies, and make all amendments necessary to bring them into line with the GDPR’s requirements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Consent</strong>: this is unlikely to be the most appropriate lawful basis for the processing of personal data by Education providers going forward. The GDPR requires that consent must be able to be withdrawn as easily as it is given and processing must immediately stop. Clearly, this is not practical given Education providers’ obligations to protect the safety and welfare of their students. Education establishments will need to look to other bases provided in the GDPR to ensure that their processing activities are lawful. This is a more complex legal question, and will be based on a case-by-case basis, the operation of the education provider in relation to the data.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Consent must be given for the processing or flow of personal data to third-parties, so in order to become GDPR compliant, education providers must be aware of where various pieces of data are going and why.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Security and Third-Party Agreements</strong>: a comprehensive, written information security programme should be developed and implemented to protect the security, confidentiality and integrity of personal data held. A review of arrangements with all third-parties engaged to handle, store or otherwise process personal data collected and/or stored by the institution should be undertaken. The GDPR requires all data controllers to have binding contracts with the parties that process data on their behalf. For education providers, it is important that all current service level agreements and other contracts with third-party suppliers are carefully reviewed and amended to ensure they are GDPR-compliant.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Supervisory authorities and penalties</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Under the GDPR, EU member states have to designate qualified supervisory authorities with specified oversight, investigatory, and enforcement powers to implement its requirements . These authorities will oversee compliance, provide consultation and prior approvals, and receive and administratively adjudicate complaints against controllers and processors. They can also impose fines of up to two percent of the global revenues for certain penalties, and up to four percent of such revenues for more serious ones.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Just as important as the supervisory authorities’ power to impose penalties is the consultative role they are assigned in reviewing mandatory data protection impact assessments that data controllers and processors must regularly perform in connection with high-risk processing activities prior to implementing them.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Conclusion</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">The GDPR took years to be adopted, and it may be safe to assume that it will take years before its real impact and practical compliance requirements become fully settled.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East with EU-based operations and those with significant numbers of EU residents as students — particularly those delivering distance education programmes to such students within the EU — should start to map out a strategy of implementing GDPR-compliant practices now.</p>|<p dir=\"LTR\" align=\"LEFT\">The General Data Protection Regulations (\"GDPR\") came into effect on 25 May 2018. The <a href=\"https://www.tamimi.com/law-update-articles/gdpr-a-plain-english-guide-to-the-implications-for-middle-east-marketing-activities/\">GDPR</a>, which replaced the EU’s Data Protection Directive of 1995, represents a significant expansion of personal privacy rights for EU residents.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The politically challenging task of escalating privacy protection from a directive to a binding regulation began in 2009 and involved protracted negotiations among the European Commission (the EU executive body) and its two legislative chambers, the Council of the European Union and the European Parliament. This was partially motivated by the desire for uniform protections for all EU residents and partially necessitated by the needs of regulated entities for consistent compliance requirements across the EU.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why should Middle East institutions pay attention to GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8219\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/8.jpg\" alt=\"\" width=\"456\" height=\"349\" />It is widely known that the GDPR has more enforceable legal status in comparison to the previous Data Protection Directive, and it is also substantively more robust in a number of significant ways. The most notable of these for entities located in the Middle East is that, unlike the Data Protection Directive (which mandated compliance by entities with a physical EU presence, such as a processing center or even a server), the GDPR’s coverage extends to entities with no physical EU footprint if they process personal data of EU data subjects residing in the EU. This limited extraterritoriality, while a significant expansion of the reach of EU law to entities outside the EU, does not attach to EU citizens abroad. As such, a Middle East entity involved in a data transaction with an EU resident in the Middle East, for instance, would not be subject to the GDPR; the same entity engaging in significant and intentional cyber-transactions with EU residents would be.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why education providers should pay attention to the GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Middle East-based Education institutions newly affected by the extraterritorial reach of GDPR are those that target distance education programmes to EU residents who are physically located in one of the member states. Such programmes were not initially subject to EU privacy law under the Data Protection Directive if they did not have infrastructure within the EU, but are now covered under the GDPR, even if they have no physical presence within the EU. However, Article 3 of the GDPR suggests that incidental transactions, such as the mere availability of goods or services via a website, are not automatic grounds for subjecting non-EU entities to the GDPR.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On the face of it, it is tempting to believe that Education institutions that enrol EU residents in the Middle East are entirely exempt from compliance with the GDPR. This would certainly be true for EU residents who initiate their admission application process from outside the EU. In the case where EU applicants start the admissions process from their home countries and obtain visas to enter the Middle East after gaining admission to eligible programmes, the GDPR will apply and such institutions would need to demonstrate compliance. In essence, active student recruitment campaigns targeting EU residents could subject the data collected from such students, whether via automated or non-automated means, to compliance requirements under the GDPR. It may take a few years for a more precise understanding of how the GDPR will be further defined, interpreted, and enforced by the EU and national data protection authorities of its member states. At such early stage, it is probably unlikely that the most expansive interpretation of the regulation’s extraterritorial application would be immediately enforced against non-EU entities. It is clear however that institutions with significant engagement with the EU, either in the form of physical presence or of distance-delivered services, should take immediate steps to ensure compliance with the GDPR.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Whose data does GDPR protect?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Personal data of all living individuals physically within the EU (\"EU data subjects\") are covered by the GDPR. The regulation makes no distinctions based on individual’s permanent places of residence or nationality. The GDPR applies to all such individual’s personal data, defined as any information that can be used to, directly or indirectly, identify a person. These include not only such obvious information as educational, financial, employment-related, and health data, but also photographs, personal phone numbers, and IP addresses.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">How should the education sector prepare for GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East should consider a number of action points as part of their GDPR compliance preparations as follows:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Review</strong>: A comprehensive review should be undertaken to determine (i) what personal data is currently held, (ii) how that data was acquired, and (iii) for what purpose it was acquired. Education providers should consider whether they have obtained and hold such personal data in accordance with the requirements of GDPR. If they have not, such data should be deleted, or consideration should be given as to how its continued storage / use may be rendered GDPR-compliant.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Privacy policies</strong>: privacy policies are a key element of the new regime. Education providers should review their existing privacy policies, and make all amendments necessary to bring them into line with the GDPR’s requirements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Consent</strong>: this is unlikely to be the most appropriate lawful basis for the processing of personal data by Education providers going forward. The GDPR requires that consent must be able to be withdrawn as easily as it is given and processing must immediately stop. Clearly, this is not practical given Education providers’ obligations to protect the safety and welfare of their students. Education establishments will need to look to other bases provided in the GDPR to ensure that their processing activities are lawful. This is a more complex legal question, and will be based on a case-by-case basis, the operation of the education provider in relation to the data.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Consent must be given for the processing or flow of personal data to third-parties, so in order to become GDPR compliant, education providers must be aware of where various pieces of data are going and why.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Security and Third-Party Agreements</strong>: a comprehensive, written information security programme should be developed and implemented to protect the security, confidentiality and integrity of personal data held. A review of arrangements with all third-parties engaged to handle, store or otherwise process personal data collected and/or stored by the institution should be undertaken. The GDPR requires all data controllers to have binding contracts with the parties that process data on their behalf. For education providers, it is important that all current service level agreements and other contracts with third-party suppliers are carefully reviewed and amended to ensure they are GDPR-compliant.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Supervisory authorities and penalties</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Under the GDPR, EU member states have to designate qualified supervisory authorities with specified oversight, investigatory, and enforcement powers to implement its requirements . These authorities will oversee compliance, provide consultation and prior approvals, and receive and administratively adjudicate complaints against controllers and processors. They can also impose fines of up to two percent of the global revenues for certain penalties, and up to four percent of such revenues for more serious ones.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Just as important as the supervisory authorities’ power to impose penalties is the consultative role they are assigned in reviewing mandatory data protection impact assessments that data controllers and processors must regularly perform in connection with high-risk processing activities prior to implementing them.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Conclusion</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">The GDPR took years to be adopted, and it may be safe to assume that it will take years before its real impact and practical compliance requirements become fully settled.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East with EU-based operations and those with significant numbers of EU residents as students — particularly those delivering distance education programmes to such students within the EU — should start to map out a strategy of implementing GDPR-compliant practices now.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>'),
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(296815, 28432, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"439\" height=\"305\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296816, 28432, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"410\" height=\"285\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296819, 28432, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"410\" height=\"285\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>|<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"439\" height=\"305\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296857, 28435, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The General Data Protection Regulations (\"GDPR\") came into effect on 25 May 2018. The <a href=\"https://www.tamimi.com/law-update-articles/gdpr-a-plain-english-guide-to-the-implications-for-middle-east-marketing-activities/\">GDPR</a>, which replaced the EU’s Data Protection Directive of 1995, represents a significant expansion of personal privacy rights for EU residents.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The politically challenging task of escalating privacy protection from a directive to a binding regulation began in 2009 and involved protracted negotiations among the European Commission (the EU executive body) and its two legislative chambers, the Council of the European Union and the European Parliament. This was partially motivated by the desire for uniform protections for all EU residents and partially necessitated by the needs of regulated entities for consistent compliance requirements across the EU.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why should Middle East institutions pay attention to GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8219\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/8.jpg\" alt=\"\" width=\"400\" height=\"306\" />It is widely known that the GDPR has more enforceable legal status in comparison to the previous Data Protection Directive, and it is also substantively more robust in a number of significant ways. The most notable of these for entities located in the Middle East is that, unlike the Data Protection Directive (which mandated compliance by entities with a physical EU presence, such as a processing center or even a server), the GDPR’s coverage extends to entities with no physical EU footprint if they process personal data of EU data subjects residing in the EU. This limited extraterritoriality, while a significant expansion of the reach of EU law to entities outside the EU, does not attach to EU citizens abroad. As such, a Middle East entity involved in a data transaction with an EU resident in the Middle East, for instance, would not be subject to the GDPR; the same entity engaging in significant and intentional cyber-transactions with EU residents would be.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why education providers should pay attention to the GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Middle East-based Education institutions newly affected by the extraterritorial reach of GDPR are those that target distance education programmes to EU residents who are physically located in one of the member states. Such programmes were not initially subject to EU privacy law under the Data Protection Directive if they did not have infrastructure within the EU, but are now covered under the GDPR, even if they have no physical presence within the EU. However, Article 3 of the GDPR suggests that incidental transactions, such as the mere availability of goods or services via a website, are not automatic grounds for subjecting non-EU entities to the GDPR.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On the face of it, it is tempting to believe that Education institutions that enrol EU residents in the Middle East are entirely exempt from compliance with the GDPR. This would certainly be true for EU residents who initiate their admission application process from outside the EU. In the case where EU applicants start the admissions process from their home countries and obtain visas to enter the Middle East after gaining admission to eligible programmes, the GDPR will apply and such institutions would need to demonstrate compliance. In essence, active student recruitment campaigns targeting EU residents could subject the data collected from such students, whether via automated or non-automated means, to compliance requirements under the GDPR. It may take a few years for a more precise understanding of how the GDPR will be further defined, interpreted, and enforced by the EU and national data protection authorities of its member states. At such early stage, it is probably unlikely that the most expansive interpretation of the regulation’s extraterritorial application would be immediately enforced against non-EU entities. It is clear however that institutions with significant engagement with the EU, either in the form of physical presence or of distance-delivered services, should take immediate steps to ensure compliance with the GDPR.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Whose data does GDPR protect?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Personal data of all living individuals physically within the EU (\"EU data subjects\") are covered by the GDPR. The regulation makes no distinctions based on individual’s permanent places of residence or nationality. The GDPR applies to all such individual’s personal data, defined as any information that can be used to, directly or indirectly, identify a person. These include not only such obvious information as educational, financial, employment-related, and health data, but also photographs, personal phone numbers, and IP addresses.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">How should the education sector prepare for GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East should consider a number of action points as part of their GDPR compliance preparations as follows:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Review</strong>: A comprehensive review should be undertaken to determine (i) what personal data is currently held, (ii) how that data was acquired, and (iii) for what purpose it was acquired. Education providers should consider whether they have obtained and hold such personal data in accordance with the requirements of GDPR. If they have not, such data should be deleted, or consideration should be given as to how its continued storage / use may be rendered GDPR-compliant.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Privacy policies</strong>: privacy policies are a key element of the new regime. Education providers should review their existing privacy policies, and make all amendments necessary to bring them into line with the GDPR’s requirements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Consent</strong>: this is unlikely to be the most appropriate lawful basis for the processing of personal data by Education providers going forward. The GDPR requires that consent must be able to be withdrawn as easily as it is given and processing must immediately stop. Clearly, this is not practical given Education providers’ obligations to protect the safety and welfare of their students. Education establishments will need to look to other bases provided in the GDPR to ensure that their processing activities are lawful. This is a more complex legal question, and will be based on a case-by-case basis, the operation of the education provider in relation to the data.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Consent must be given for the processing or flow of personal data to third-parties, so in order to become GDPR compliant, education providers must be aware of where various pieces of data are going and why.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Security and Third-Party Agreements</strong>: a comprehensive, written information security programme should be developed and implemented to protect the security, confidentiality and integrity of personal data held. A review of arrangements with all third-parties engaged to handle, store or otherwise process personal data collected and/or stored by the institution should be undertaken. The GDPR requires all data controllers to have binding contracts with the parties that process data on their behalf. For education providers, it is important that all current service level agreements and other contracts with third-party suppliers are carefully reviewed and amended to ensure they are GDPR-compliant.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Supervisory authorities and penalties</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Under the GDPR, EU member states have to designate qualified supervisory authorities with specified oversight, investigatory, and enforcement powers to implement its requirements . These authorities will oversee compliance, provide consultation and prior approvals, and receive and administratively adjudicate complaints against controllers and processors. They can also impose fines of up to two percent of the global revenues for certain penalties, and up to four percent of such revenues for more serious ones.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Just as important as the supervisory authorities’ power to impose penalties is the consultative role they are assigned in reviewing mandatory data protection impact assessments that data controllers and processors must regularly perform in connection with high-risk processing activities prior to implementing them.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Conclusion</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">The GDPR took years to be adopted, and it may be safe to assume that it will take years before its real impact and practical compliance requirements become fully settled.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East with EU-based operations and those with significant numbers of EU residents as students — particularly those delivering distance education programmes to such students within the EU — should start to map out a strategy of implementing GDPR-compliant practices now.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"aligncenter size-full wp-image-8220\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/9.jpg\" alt=\"\" width=\"708\" height=\"120\" /></p>'),
(296858, 28435, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The General Data Protection Regulations (\"GDPR\") came into effect on 25 May 2018. The <a href=\"https://www.tamimi.com/law-update-articles/gdpr-a-plain-english-guide-to-the-implications-for-middle-east-marketing-activities/\">GDPR</a>, which replaced the EU’s Data Protection Directive of 1995, represents a significant expansion of personal privacy rights for EU residents.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The politically challenging task of escalating privacy protection from a directive to a binding regulation began in 2009 and involved protracted negotiations among the European Commission (the EU executive body) and its two legislative chambers, the Council of the European Union and the European Parliament. This was partially motivated by the desire for uniform protections for all EU residents and partially necessitated by the needs of regulated entities for consistent compliance requirements across the EU.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why should Middle East institutions pay attention to GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8219\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/8.jpg\" alt=\"\" width=\"456\" height=\"349\" />It is widely known that the GDPR has more enforceable legal status in comparison to the previous Data Protection Directive, and it is also substantively more robust in a number of significant ways. The most notable of these for entities located in the Middle East is that, unlike the Data Protection Directive (which mandated compliance by entities with a physical EU presence, such as a processing center or even a server), the GDPR’s coverage extends to entities with no physical EU footprint if they process personal data of EU data subjects residing in the EU. This limited extraterritoriality, while a significant expansion of the reach of EU law to entities outside the EU, does not attach to EU citizens abroad. As such, a Middle East entity involved in a data transaction with an EU resident in the Middle East, for instance, would not be subject to the GDPR; the same entity engaging in significant and intentional cyber-transactions with EU residents would be.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why education providers should pay attention to the GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Middle East-based Education institutions newly affected by the extraterritorial reach of GDPR are those that target distance education programmes to EU residents who are physically located in one of the member states. Such programmes were not initially subject to EU privacy law under the Data Protection Directive if they did not have infrastructure within the EU, but are now covered under the GDPR, even if they have no physical presence within the EU. However, Article 3 of the GDPR suggests that incidental transactions, such as the mere availability of goods or services via a website, are not automatic grounds for subjecting non-EU entities to the GDPR.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On the face of it, it is tempting to believe that Education institutions that enrol EU residents in the Middle East are entirely exempt from compliance with the GDPR. This would certainly be true for EU residents who initiate their admission application process from outside the EU. In the case where EU applicants start the admissions process from their home countries and obtain visas to enter the Middle East after gaining admission to eligible programmes, the GDPR will apply and such institutions would need to demonstrate compliance. In essence, active student recruitment campaigns targeting EU residents could subject the data collected from such students, whether via automated or non-automated means, to compliance requirements under the GDPR. It may take a few years for a more precise understanding of how the GDPR will be further defined, interpreted, and enforced by the EU and national data protection authorities of its member states. At such early stage, it is probably unlikely that the most expansive interpretation of the regulation’s extraterritorial application would be immediately enforced against non-EU entities. It is clear however that institutions with significant engagement with the EU, either in the form of physical presence or of distance-delivered services, should take immediate steps to ensure compliance with the GDPR.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Whose data does GDPR protect?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Personal data of all living individuals physically within the EU (\"EU data subjects\") are covered by the GDPR. The regulation makes no distinctions based on individual’s permanent places of residence or nationality. The GDPR applies to all such individual’s personal data, defined as any information that can be used to, directly or indirectly, identify a person. These include not only such obvious information as educational, financial, employment-related, and health data, but also photographs, personal phone numbers, and IP addresses.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">How should the education sector prepare for GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East should consider a number of action points as part of their GDPR compliance preparations as follows:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Review</strong>: A comprehensive review should be undertaken to determine (i) what personal data is currently held, (ii) how that data was acquired, and (iii) for what purpose it was acquired. Education providers should consider whether they have obtained and hold such personal data in accordance with the requirements of GDPR. If they have not, such data should be deleted, or consideration should be given as to how its continued storage / use may be rendered GDPR-compliant.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Privacy policies</strong>: privacy policies are a key element of the new regime. Education providers should review their existing privacy policies, and make all amendments necessary to bring them into line with the GDPR’s requirements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Consent</strong>: this is unlikely to be the most appropriate lawful basis for the processing of personal data by Education providers going forward. The GDPR requires that consent must be able to be withdrawn as easily as it is given and processing must immediately stop. Clearly, this is not practical given Education providers’ obligations to protect the safety and welfare of their students. Education establishments will need to look to other bases provided in the GDPR to ensure that their processing activities are lawful. This is a more complex legal question, and will be based on a case-by-case basis, the operation of the education provider in relation to the data.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Consent must be given for the processing or flow of personal data to third-parties, so in order to become GDPR compliant, education providers must be aware of where various pieces of data are going and why.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Security and Third-Party Agreements</strong>: a comprehensive, written information security programme should be developed and implemented to protect the security, confidentiality and integrity of personal data held. A review of arrangements with all third-parties engaged to handle, store or otherwise process personal data collected and/or stored by the institution should be undertaken. The GDPR requires all data controllers to have binding contracts with the parties that process data on their behalf. For education providers, it is important that all current service level agreements and other contracts with third-party suppliers are carefully reviewed and amended to ensure they are GDPR-compliant.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Supervisory authorities and penalties</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Under the GDPR, EU member states have to designate qualified supervisory authorities with specified oversight, investigatory, and enforcement powers to implement its requirements . These authorities will oversee compliance, provide consultation and prior approvals, and receive and administratively adjudicate complaints against controllers and processors. They can also impose fines of up to two percent of the global revenues for certain penalties, and up to four percent of such revenues for more serious ones.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Just as important as the supervisory authorities’ power to impose penalties is the consultative role they are assigned in reviewing mandatory data protection impact assessments that data controllers and processors must regularly perform in connection with high-risk processing activities prior to implementing them.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Conclusion</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">The GDPR took years to be adopted, and it may be safe to assume that it will take years before its real impact and practical compliance requirements become fully settled.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East with EU-based operations and those with significant numbers of EU residents as students — particularly those delivering distance education programmes to such students within the EU — should start to map out a strategy of implementing GDPR-compliant practices now.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>'),
(296859, 28435, 'MetaLink', 'content'),
(296860, 28435, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=8200&amp;action=edit'),
(296861, 28435, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The General Data Protection Regulations (\"GDPR\") came into effect on 25 May 2018. The <a href=\"https://www.tamimi.com/law-update-articles/gdpr-a-plain-english-guide-to-the-implications-for-middle-east-marketing-activities/\">GDPR</a>, which replaced the EU’s Data Protection Directive of 1995, represents a significant expansion of personal privacy rights for EU residents.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The politically challenging task of escalating privacy protection from a directive to a binding regulation began in 2009 and involved protracted negotiations among the European Commission (the EU executive body) and its two legislative chambers, the Council of the European Union and the European Parliament. This was partially motivated by the desire for uniform protections for all EU residents and partially necessitated by the needs of regulated entities for consistent compliance requirements across the EU.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why should Middle East institutions pay attention to GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8219\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/8.jpg\" alt=\"\" width=\"456\" height=\"349\" />It is widely known that the GDPR has more enforceable legal status in comparison to the previous Data Protection Directive, and it is also substantively more robust in a number of significant ways. The most notable of these for entities located in the Middle East is that, unlike the Data Protection Directive (which mandated compliance by entities with a physical EU presence, such as a processing center or even a server), the GDPR’s coverage extends to entities with no physical EU footprint if they process personal data of EU data subjects residing in the EU. This limited extraterritoriality, while a significant expansion of the reach of EU law to entities outside the EU, does not attach to EU citizens abroad. As such, a Middle East entity involved in a data transaction with an EU resident in the Middle East, for instance, would not be subject to the GDPR; the same entity engaging in significant and intentional cyber-transactions with EU residents would be.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why education providers should pay attention to the GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Middle East-based Education institutions newly affected by the extraterritorial reach of GDPR are those that target distance education programmes to EU residents who are physically located in one of the member states. Such programmes were not initially subject to EU privacy law under the Data Protection Directive if they did not have infrastructure within the EU, but are now covered under the GDPR, even if they have no physical presence within the EU. However, Article 3 of the GDPR suggests that incidental transactions, such as the mere availability of goods or services via a website, are not automatic grounds for subjecting non-EU entities to the GDPR.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On the face of it, it is tempting to believe that Education institutions that enrol EU residents in the Middle East are entirely exempt from compliance with the GDPR. This would certainly be true for EU residents who initiate their admission application process from outside the EU. In the case where EU applicants start the admissions process from their home countries and obtain visas to enter the Middle East after gaining admission to eligible programmes, the GDPR will apply and such institutions would need to demonstrate compliance. In essence, active student recruitment campaigns targeting EU residents could subject the data collected from such students, whether via automated or non-automated means, to compliance requirements under the GDPR. It may take a few years for a more precise understanding of how the GDPR will be further defined, interpreted, and enforced by the EU and national data protection authorities of its member states. At such early stage, it is probably unlikely that the most expansive interpretation of the regulation’s extraterritorial application would be immediately enforced against non-EU entities. It is clear however that institutions with significant engagement with the EU, either in the form of physical presence or of distance-delivered services, should take immediate steps to ensure compliance with the GDPR.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Whose data does GDPR protect?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Personal data of all living individuals physically within the EU (\"EU data subjects\") are covered by the GDPR. The regulation makes no distinctions based on individual’s permanent places of residence or nationality. The GDPR applies to all such individual’s personal data, defined as any information that can be used to, directly or indirectly, identify a person. These include not only such obvious information as educational, financial, employment-related, and health data, but also photographs, personal phone numbers, and IP addresses.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">How should the education sector prepare for GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East should consider a number of action points as part of their GDPR compliance preparations as follows:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Review</strong>: A comprehensive review should be undertaken to determine (i) what personal data is currently held, (ii) how that data was acquired, and (iii) for what purpose it was acquired. Education providers should consider whether they have obtained and hold such personal data in accordance with the requirements of GDPR. If they have not, such data should be deleted, or consideration should be given as to how its continued storage / use may be rendered GDPR-compliant.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Privacy policies</strong>: privacy policies are a key element of the new regime. Education providers should review their existing privacy policies, and make all amendments necessary to bring them into line with the GDPR’s requirements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Consent</strong>: this is unlikely to be the most appropriate lawful basis for the processing of personal data by Education providers going forward. The GDPR requires that consent must be able to be withdrawn as easily as it is given and processing must immediately stop. Clearly, this is not practical given Education providers’ obligations to protect the safety and welfare of their students. Education establishments will need to look to other bases provided in the GDPR to ensure that their processing activities are lawful. This is a more complex legal question, and will be based on a case-by-case basis, the operation of the education provider in relation to the data.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Consent must be given for the processing or flow of personal data to third-parties, so in order to become GDPR compliant, education providers must be aware of where various pieces of data are going and why.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Security and Third-Party Agreements</strong>: a comprehensive, written information security programme should be developed and implemented to protect the security, confidentiality and integrity of personal data held. A review of arrangements with all third-parties engaged to handle, store or otherwise process personal data collected and/or stored by the institution should be undertaken. The GDPR requires all data controllers to have binding contracts with the parties that process data on their behalf. For education providers, it is important that all current service level agreements and other contracts with third-party suppliers are carefully reviewed and amended to ensure they are GDPR-compliant.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Supervisory authorities and penalties</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Under the GDPR, EU member states have to designate qualified supervisory authorities with specified oversight, investigatory, and enforcement powers to implement its requirements . These authorities will oversee compliance, provide consultation and prior approvals, and receive and administratively adjudicate complaints against controllers and processors. They can also impose fines of up to two percent of the global revenues for certain penalties, and up to four percent of such revenues for more serious ones.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Just as important as the supervisory authorities’ power to impose penalties is the consultative role they are assigned in reviewing mandatory data protection impact assessments that data controllers and processors must regularly perform in connection with high-risk processing activities prior to implementing them.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Conclusion</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">The GDPR took years to be adopted, and it may be safe to assume that it will take years before its real impact and practical compliance requirements become fully settled.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East with EU-based operations and those with significant numbers of EU residents as students — particularly those delivering distance education programmes to such students within the EU — should start to map out a strategy of implementing GDPR-compliant practices now.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"></p>|<p dir=\"LTR\" align=\"LEFT\">The General Data Protection Regulations (\"GDPR\") came into effect on 25 May 2018. The <a href=\"https://www.tamimi.com/law-update-articles/gdpr-a-plain-english-guide-to-the-implications-for-middle-east-marketing-activities/\">GDPR</a>, which replaced the EU’s Data Protection Directive of 1995, represents a significant expansion of personal privacy rights for EU residents.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The politically challenging task of escalating privacy protection from a directive to a binding regulation began in 2009 and involved protracted negotiations among the European Commission (the EU executive body) and its two legislative chambers, the Council of the European Union and the European Parliament. This was partially motivated by the desire for uniform protections for all EU residents and partially necessitated by the needs of regulated entities for consistent compliance requirements across the EU.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why should Middle East institutions pay attention to GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8219\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/8.jpg\" alt=\"\" width=\"400\" height=\"306\" />It is widely known that the GDPR has more enforceable legal status in comparison to the previous Data Protection Directive, and it is also substantively more robust in a number of significant ways. The most notable of these for entities located in the Middle East is that, unlike the Data Protection Directive (which mandated compliance by entities with a physical EU presence, such as a processing center or even a server), the GDPR’s coverage extends to entities with no physical EU footprint if they process personal data of EU data subjects residing in the EU. This limited extraterritoriality, while a significant expansion of the reach of EU law to entities outside the EU, does not attach to EU citizens abroad. As such, a Middle East entity involved in a data transaction with an EU resident in the Middle East, for instance, would not be subject to the GDPR; the same entity engaging in significant and intentional cyber-transactions with EU residents would be.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Why education providers should pay attention to the GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Middle East-based Education institutions newly affected by the extraterritorial reach of GDPR are those that target distance education programmes to EU residents who are physically located in one of the member states. Such programmes were not initially subject to EU privacy law under the Data Protection Directive if they did not have infrastructure within the EU, but are now covered under the GDPR, even if they have no physical presence within the EU. However, Article 3 of the GDPR suggests that incidental transactions, such as the mere availability of goods or services via a website, are not automatic grounds for subjecting non-EU entities to the GDPR.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On the face of it, it is tempting to believe that Education institutions that enrol EU residents in the Middle East are entirely exempt from compliance with the GDPR. This would certainly be true for EU residents who initiate their admission application process from outside the EU. In the case where EU applicants start the admissions process from their home countries and obtain visas to enter the Middle East after gaining admission to eligible programmes, the GDPR will apply and such institutions would need to demonstrate compliance. In essence, active student recruitment campaigns targeting EU residents could subject the data collected from such students, whether via automated or non-automated means, to compliance requirements under the GDPR. It may take a few years for a more precise understanding of how the GDPR will be further defined, interpreted, and enforced by the EU and national data protection authorities of its member states. At such early stage, it is probably unlikely that the most expansive interpretation of the regulation’s extraterritorial application would be immediately enforced against non-EU entities. It is clear however that institutions with significant engagement with the EU, either in the form of physical presence or of distance-delivered services, should take immediate steps to ensure compliance with the GDPR.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Whose data does GDPR protect?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Personal data of all living individuals physically within the EU (\"EU data subjects\") are covered by the GDPR. The regulation makes no distinctions based on individual’s permanent places of residence or nationality. The GDPR applies to all such individual’s personal data, defined as any information that can be used to, directly or indirectly, identify a person. These include not only such obvious information as educational, financial, employment-related, and health data, but also photographs, personal phone numbers, and IP addresses.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">How should the education sector prepare for GDPR?</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East should consider a number of action points as part of their GDPR compliance preparations as follows:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Review</strong>: A comprehensive review should be undertaken to determine (i) what personal data is currently held, (ii) how that data was acquired, and (iii) for what purpose it was acquired. Education providers should consider whether they have obtained and hold such personal data in accordance with the requirements of GDPR. If they have not, such data should be deleted, or consideration should be given as to how its continued storage / use may be rendered GDPR-compliant.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Privacy policies</strong>: privacy policies are a key element of the new regime. Education providers should review their existing privacy policies, and make all amendments necessary to bring them into line with the GDPR’s requirements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Consent</strong>: this is unlikely to be the most appropriate lawful basis for the processing of personal data by Education providers going forward. The GDPR requires that consent must be able to be withdrawn as easily as it is given and processing must immediately stop. Clearly, this is not practical given Education providers’ obligations to protect the safety and welfare of their students. Education establishments will need to look to other bases provided in the GDPR to ensure that their processing activities are lawful. This is a more complex legal question, and will be based on a case-by-case basis, the operation of the education provider in relation to the data.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Consent must be given for the processing or flow of personal data to third-parties, so in order to become GDPR compliant, education providers must be aware of where various pieces of data are going and why.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Data Security and Third-Party Agreements</strong>: a comprehensive, written information security programme should be developed and implemented to protect the security, confidentiality and integrity of personal data held. A review of arrangements with all third-parties engaged to handle, store or otherwise process personal data collected and/or stored by the institution should be undertaken. The GDPR requires all data controllers to have binding contracts with the parties that process data on their behalf. For education providers, it is important that all current service level agreements and other contracts with third-party suppliers are carefully reviewed and amended to ensure they are GDPR-compliant.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Supervisory authorities and penalties</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Under the GDPR, EU member states have to designate qualified supervisory authorities with specified oversight, investigatory, and enforcement powers to implement its requirements . These authorities will oversee compliance, provide consultation and prior approvals, and receive and administratively adjudicate complaints against controllers and processors. They can also impose fines of up to two percent of the global revenues for certain penalties, and up to four percent of such revenues for more serious ones.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Just as important as the supervisory authorities’ power to impose penalties is the consultative role they are assigned in reviewing mandatory data protection impact assessments that data controllers and processors must regularly perform in connection with high-risk processing activities prior to implementing them.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">Conclusion</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">The GDPR took years to be adopted, and it may be safe to assume that it will take years before its real impact and practical compliance requirements become fully settled.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Education providers in the Middle East with EU-based operations and those with significant numbers of EU residents as students — particularly those delivering distance education programmes to such students within the EU — should start to map out a strategy of implementing GDPR-compliant practices now.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"aligncenter size-full wp-image-8220\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/9.jpg\" alt=\"\" width=\"708\" height=\"120\" /></p>'),
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(296899, 28438, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"405\" height=\"282\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296900, 28438, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"439\" height=\"305\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296903, 28438, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"439\" height=\"305\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>|<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"405\" height=\"282\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296941, 28441, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"520\" height=\"362\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"541\" height=\"341\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296942, 28441, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"405\" height=\"282\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296943, 28441, 'MetaLink', 'content'),
(296944, 28441, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=8199&amp;action=edit'),
(296945, 28441, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft  wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"405\" height=\"282\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"401\" height=\"252\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>|<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"520\" height=\"362\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"541\" height=\"341\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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(296983, 28444, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8217 alignright\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"520\" height=\"362\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"wp-image-8218  alignright\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"541\" height=\"341\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296984, 28444, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"520\" height=\"362\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"541\" height=\"341\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
(296985, 28444, 'MetaLink', 'content'),
(296986, 28444, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=8199&amp;action=edit'),
(296987, 28444, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft wp-image-8217\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"520\" height=\"362\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"alignleft wp-image-8218 \" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"541\" height=\"341\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>|<p dir=\"LTR\" align=\"LEFT\">The <a href=\"https://www.tamimi.com/law-update-articles/getting-to-grips-with-vat-implementation/\">introduction of value added tax</a> (VAT) in the UAE and KSA raises complexities for education providers, even as both countries are now moving towards the eighth month since the implementation of VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this article, we will examine the UAE VAT treatment of supplies made in the education sector and the VAT issues which arise in the industry.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT story so far in the Education Sector in the UAE</h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8217 alignright\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/6.jpg\" alt=\"\" width=\"520\" height=\"362\" /></h3>\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment in the education sector?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">By way of background, VAT is imposed at the standard rate of 5% on the taxable supply of most goods and services (unless the supply is zero-rated (0%) or exempt) made in the UAE by a taxable person for consideration in the course of conducting business in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The main difference between standard rated, zero rated and exempt supplies is that input tax incurred in connection with standard rated or zero rated supplies is as a general rule recoverable (subject to the normal rules of input tax recovery). Conversely, input VAT incurred in connection with exempt supplies is not generally recoverable.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, the supply of educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government is subject to VAT at the zero-rate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a supply of educational services to qualify for zero-rating, the following conditions prescribed under the UAE VAT Executive Regulations should be fulfilled:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the supply of educational services must be provided in accordance with a curriculum recognised by the federal/local competent government entity;</li>\r\n 	<li dir=\"LTR\">the supplier of the educational services is an educational institution which is accredited by the federal/local competent government entity; and</li>\r\n 	<li dir=\"LTR\">where the supplier of educational services is a higher education institution, the institution is either (i) owned by the federal or local government; or (ii) receiving at least 50% of its annual funding directly from the federal or local government.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also avail of the zero-rating treatment in respect of the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">a supply of goods or services that is directly related to the provision of a zero-rated educational service; and</li>\r\n 	<li dir=\"LTR\">printed and digital reading material which are related to the curriculum of an education.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Are there any exceptions to the zero-rating rule?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Not all supplies made by qualifying educational institutions benefit from this zero-rating rule. The following supplies are specifically excluded from this treatment and will therefore be subject to VAT at the standard rate:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">goods and services supplied to persons who are not enrolled in the educational institution;</li>\r\n 	<li dir=\"LTR\">any goods other than educational materials provided by the educational institution;</li>\r\n 	<li dir=\"LTR\">uniforms or any other clothing required to be worn by the educational institution;</li>\r\n 	<li dir=\"LTR\">electronic devices in relation to educational services;</li>\r\n 	<li dir=\"LTR\">food and beverages at the educational institution;</li>\r\n 	<li dir=\"LTR\">recreational field trips;</li>\r\n 	<li dir=\"LTR\">extracurricular activities provided for an additional fee; and</li>\r\n 	<li dir=\"LTR\">student organisation memberships.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Additionally, the supply of residential accommodation for students or school pupils is exempt from VAT. This means that qualifying educational institutions will be unable to recover any input VAT paid on expenses that are related to the supply of residential accommodation.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Would qualifying educational institutions need to register for VAT in the UAE?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions are required to register for VAT in the UAE if the value of their annual taxable turnover meets the mandatory registration threshold of AED 375,000. In calculating the value of taxable turnover, the value of standard rated and zero-rated supplied made by the qualifying educational institutions must be taken into account.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Qualifying educational institutions may also apply for an exception to register for VAT in the UAE if they make wholly zero-rated supplies. If the application is approved, the educational institution will be exempted from any VAT obligations such as filing VAT returns. However, in doing so, educational institutions will be unable to recover any input VAT incurred on their expenses. In determining whether to apply for the exception to register for VAT, educational institutions should carefully assess the potential VAT compliance costs against the amount of recoverable input VAT.</p>\r\n<img class=\"wp-image-8218  alignright\" src=\"https://www.tamimi.com/wp-content/uploads/2018/09/7.jpg\" alt=\"\" width=\"541\" height=\"341\" />\r\n<h2 dir=\"LTR\" align=\"LEFT\">\"While the primary supply of most educational services is zero-rated in the UAE, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation would continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions.\"</h2>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\">The VAT issues</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What type of supplies are \"directly related\" to the provision of a zero-rated educational service?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">As noted above, a supply of goods or services made by educational institutions is treated as zero-rated where the supply is directly related to the provision of a zero-rated educational service. However, the UAE VAT Executive Regulations do not provide further guidance on what constitutes supplies which are \"directly related\" to the provision of a zero-rated educational service. This uncertainty will likely give rise to challenges in ascertaining the VAT treatment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For example, a qualifying educational institution provides music courses. As part of the course requirements, students of the institution are required to perform in a musical concert held at the institution. Only the students’ family members and friends who received a special invitation are allowed to attend the musical concert. The concert tickets are sold at a reduced fee to cover some of the costs of running the musical concert. Can the supply of the musical performances be treated as a supply \"directly related\" to the provision of an educational service?</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is arguable that the supply of the musical performance may be \"directly related\" to the provision of educational service considering that:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">the principal supply of the qualifying educational institution is zero-rated educational service; and\\</li>\r\n 	<li dir=\"LTR\">the practical training arising from the supply of musical performances forms a necessary and essential part of the curriculum;</li>\r\n 	<li dir=\"LTR\">therefore, the supply of musical performances is ancillary to the principal supply; and</li>\r\n 	<li dir=\"LTR\">the musical concert is not in competition with any commercial enterprise and not generating additional profits.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">On the other hand, the supply of the musical performances may also be regarded as falling under the scope of the exception to the zero-rating rule, and therefore be subject to VAT at the standard rate. It can be contended that the musical performances are supplied to third parties, rather than the intended recipient of educational services, i.e., the students. Further, the supply of musical performances itself will generally be treated as standard rated if it was conducted in the course of business.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>What is the VAT treatment of grants and sponsorships?</em></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">It is common for the government or third parties to provide educational institutions with financial support such as grants or sponsorships. While the VAT legislation does not prescribe the VAT treatment of grants or sponsorships, the general principle is that if a monetary grant or sponsorship is freely given without receiving anything in return, the grant or sponsorship will not constitute consideration for any supply. Therefore, the grant or sponsorship would fall outside the scope of UAE VAT.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Conversely, if the grantor or sponsor receives a benefit or something in return from the educational institution for the monetary grant or sponsorship, the grant or sponsorship may be subject to VAT. The benefit provided by the educational institution will be rated as a taxable supply and the educational institution will have to account for VAT on the benefit. Currently, determining what constitutes a benefit is a grey area. As such, it is open to question as to whether an inclusion of the sponsor in a list of supporters in a notice or naming a university building after the sponsor may be considered as benefits.</p>\r\n&nbsp;\r\n<h3 dir=\"LTR\" align=\"LEFT\"></h3>\r\n<h3 dir=\"LTR\" align=\"LEFT\">Final remarks</h3>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, the primary supply of most educational services is zero-rated in the UAE to the extent the educational services are provided in accordance with an accredited curriculum by qualifying educational institutions. Notwithstanding this, the VAT treatment of some activities may not always be straightforward. Given that the VAT regime is still in its early stages of implementation, it is expected that the VAT legislation will continue to evolve. Educational institutions should continuously ensure that the correct VAT treatment is applied to all of its transactions, in compliance with the current VAT legislation.</p>\r\n<em>Al Tamimi &amp; Company’s <a href=\"https://www.tamimi.com/practice/tax/\">tax team</a> regularly advises on VAT and other tax matters. For further information, please contact <a href=\"https://www.tamimi.com/lawyer/shiraz-khan/\">Shiraz Khan</a> (<a href=\"mailto:s.khan@tamimi.com\">s.khan@tamimi.com</a>) or <a href=\"https://www.tamimi.com/lawyer/janet-gooi/\">Janet Gooi</a> (<a href=\"mailto:j.gooi@tamimi.com\">j.gooi@tamimi.com</a>).</em>'),
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