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| 23 August, 2017

Saudi Arabia to charge VAT on private education

Secondary school students sit for an exam at the Abu Baker Al Arabi government school in Riyadh.

Secondary school students sit for an exam at the Abu Baker Al Arabi government school in Riyadh.

REUTERS/Fahad Shadeed

23 August 2017

Saudi Arabia will introduce 5 percent value added tax (VAT) on private educational institutions, the Zakat and Income Tax Authority told Zawya in an email statement.

The 5 percent tax rate applies to private nurseries, schools and universities in the kingdom, the authority added.

“The VAT will be taken from the parent if the school has already registered for VAT. It will be clear soon,” the email stated.

Schools in Saudi Arabia are not currently authorised to increase tuition fees in the middle of the academic year, Malik Taleb, chairman of the private and international schools committee at the Jeddah Chamber of Commerce and Industry (JCCI) told Zawya in a telephone interview on Wednesday.

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“The schools need to submit requests to the authorities to raise the fees along with the justification for the hike after the VAT implementation goes into effect in 2018. If the request is approved, the parents will bear the additional fees,” Taleb added.

The tax will be applied both to academic tuition fees as well as students’ transport costs, Taleb said, adding that any source of income for private academic institutions will be taxed.

All businesses and entities with an annual revenue of more than 375,000 Saudi riyals ($102,104) are required to register for value-added tax (VAT) by December 20, 2017, the Saudi tax authority announced through its newly-launched official website.

The registration process will open from September 2017, and large businesses that are already registered for other taxes in the kingdom will be automatically registered

In the UAE, VAT on schools and kindergartens will be imposed at a zero percent rate, a consultant in the UAE’s Federal Tax Authority said, so schools don’t have the right to increase their fees. The zero percent rate allows companies and institutions to reclaim VAT paid for business services and costs.

© Zawya 2017