Education Sector VAT Implications

The education sector experiences a mix of VAT rates depending on the service type and the institution’s ownership. Notably, private and public school education, excluding higher education, alongside goods and services provided by these institutions, are exempt from VAT. The same applies to government-owned or significantly government-funded higher education institutions. Contrastingly, private higher educational institutions and related services are subjected to a 5% VAT rate. This variation extends to nursery, pre-school education, school uniforms, stationery, electronic equipment, renting of school grounds, after-school activities, and school trips, with certain activities being exempt and others attracting a 5% VAT rate.

Healthcare Services and VAT

Healthcare services, including preventive and treatment-focused services, enjoy a 0% VAT rate, emphasizing the sector’s vital nature. However, non-essential services like elective cosmetic procedures are taxed at 5%. This distinction extends to medicines and medical equipment, where items listed in the Cabinet Decision are exempt from VAT, whereas others are not.

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Oil and Gas Industry VAT Regulations

The VAT treatment in the oil and gas industry is straightforward, with crude oil and natural gas exempt from VAT, while other products, including petrol at the pump, are taxed at 5%.

Transportation Sector and VAT

The transportation sector benefits from various exemptions and zero rates, especially for domestic passenger transportation, which is VAT-exempt. International transportation of passengers and goods, along with supplies related to commercial transport means, enjoys a 0% VAT rate.

Real Estate VAT Nuances

The real estate sector exhibits complexity in VAT application. Commercial building sales and rentals are generally taxed at 5%, whereas the first sale or rent of residential buildings post-construction or conversion, including the first sale of charitable buildings, is VAT-exempt. Subsequent supplies and specific scenarios, such as UAE citizens building their homes, have distinct VAT treatments.

Financial Services and VAT Application

Financial services encounter a mix of exemptions and taxed transactions. Margin-based products without explicit fees are exempt from VAT, whereas services with explicit fees are taxed. Interest on various forms of lending and the issue of securities are exempt, highlighting the nuanced VAT landscape in financial services.

Precious Metals and Jewelry VAT

Investment-grade gold, silver, and platinum are exempt from VAT if they meet purity standards and are tradable on global markets. However, less pure metals and jewelry items are subject to a 5% VAT rate.

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Insurance Sector VAT Treatment

The insurance sector sees a differentiation between general insurance and reinsurance services, which are taxed, and life insurance and reinsurance, which are exempt from VAT.

Food and Beverages, and Telecommunications

Both food and beverages and telecommunications services attract a standard 5% VAT rate, indicating a broad application of VAT in these consumer-focused sectors.

Government and Non-Profit Organizations

Government activities not in competition with the private sector and certain non-profit organizations’ activities are considered outside the VAT system, emphasizing the public service aspect of these entities. However, business activities by non-profits are subject to the standard VAT rate.

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Free Zones and VAT

Transactions within designated free zones are treated distinctively, often considered outside the VAT system, yet the specifics depend on the nature of the goods and services involved.

Miscellaneous Categories

The export of goods and services, employment activities, supplies within tax groups, and the sale of second-hand goods, among others, have specific VAT treatments, highlighting the comprehensive scope of VAT’s application across the economy.

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