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Federal Tax Authority Issues

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Federal Tax Authority Issues ‘Basic Tax Information Bulletin’ to Continue Raising Tax Awareness

• Part of the Authority’s awareness campaign for 2020, the first issue of the bulletin tackles primary education.

• H.E. Khalid Al Bustani: The Federal Tax Authority is committed to diversifying its information delivery channels to ensure accuracy and transparency.

Abu Dhabi, FEBRUARY 9 , 2020 – The Federal Tax Authority (FTA) has launched the ‘Basic Tax Information Bulletin’ as part of its campaign for 2020, where it seeks to continue raising tax awareness and providing taxpayers with periodic and detailed tax information.

In its first edition, the bulletin focuses on tax treatment for the education sector (schools, pre-schools, and nurseries). Available via the FTA’s official website as of today, the document explains that the supply of educational services (including the supply of printed or digital reading material related to the recognised curriculum, among others) is zero-rated where both the curriculum and the educational institution are recognised by the competent federal or local government. 

The bulletin also noted that services of transporting students from home to the location of the educational institution and vice versa are exempt from tax. On the other hand, the supplies that are considered ‘standard-rated’ and subject to 5% Value Added Tax (VAT) include: Supplies made to Persons who are not enrolled in the educational institution; uniforms; electronic devices; food and beverages; field trips that are not related to the curriculum; and goods/services provided by a business that is not an educational institution.

According to the bulletin, educational institutions making zero-rated and standard-rated supplies are required to register for VAT provided the value of their supplies exceeded the mandatory registration threshold of AED375,000 in the last 12 months, or is expected to exceed it in the next 30 days. These institutions are therefore required to issue Tax Invoices.
Registered educational institutions are eligible for to recover input VAT, except for ‘blocked’ items, such as certain entertainment services, and purchased, leased, or rented motor vehicles that are available for personal use. 

The bulletin also provided detailed examples on a number of transactions related to the basic education sector from a VAT perspective.

FTA’s Director General His Excellency Khalid Ali Al Bustani said: “The new ‘Basic Tax Information Bulletin’ service is part of the FTA’s efforts to educate businesses in general regarding their rights and obligations under the UAE tax system. Each edition of the bulletins will address tax treatment in a given sector that is subject to the tax system, delving into the details of the topic and presenting it in a simple manner.”

“The new service is in line with our strategy to provide our services using advanced, accurate, and transparent digital systems to meet the needs of all customers,” H.E. added. “The Authority is intensifying its efforts to help businesses comply with tax regulations and procedures. It regards them as strategic partners, and always strives to educate the private sector and prepare it to efficiently navigate the tax system.”

The ‘Basic Tax Information Bulletin’ seeks to publish tax information pertaining to every sector so that businesses can refer to and easily understand where there are concepts or practices related to tax laws, executive regulations, and procedures that they find ambiguous. 

The bulletin is issued through the FTA website, and in an effort to reach the largest number of recipients, the Authority will broadcast it in the media and on social media platforms.

H.E. Al Bustani asserted that issuing ‘Basic Tax Information Bulletin’ complements the FTA’s awareness-building ecosystem, which is continuously and steadily expanding and diversifying its methods and channels. H.E. went on to note that the Authority had issued nearly 505 Tax Clarifications, 484 of which were private clarifications released following enquiries regarding specific cases, while the remaining 21 were Public Clarifications that sought to raise awareness and promote self-compliance with tax regulations. The Authority also issued 53 guides to clarify and simplify tax policy and procedures, in addition to 13 e-learning programmes, a set of short educational video clips, and several infographics.

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