VAT in GCC
Sector Impact > Services
All services will come under the purview of VAT and will attract the standard rate unless a specific type of services are exempt.
The VAT liability will also depend on where the services are rendered. If the services are rendered in the country it would be taxable. Services such as consulting or implementation or manpower resourcing rendered outside the country may not be taxable.
The Government has declared that VAT will have a varied impact on the different sectors providing services. Find the details regarding them below.
The Government has declared that VAT will have a varied impact on the different sectors providing services. Find the details regarding them below.
VAT on Educational Services
| VAT impact on Education Sector | VAT Rate |
| Private and public school education (excluding higher education) and related goods and services provided by the educational institution. | 0% |
| Higher education provided by educational institution owned by the government or 50% funded by the government, and related goods and services. | 0% |
| Education provided by higher education institutions, and related goods and services. | 5% |
| Nursery education and pre-school education | 0% |
| School Uniforms | 5% |
| Stationery | 5% |
| Electronic equipment (tablets, laptops, etc.) | 5% |
| Renting of school grounds for events | 5% |
| After-school activities for extra fees | 5% |
| After-school activities supplied by teachers and not for extra charge | 0% |
| School trip where purpose is educational and within curriculum | 0% |
| School trips for recreation and not for educational purposes | 5% |
VAT on Insurance & Reinsurance
| VAT on Insurance Services | VAT Rate |
| Insurance and Reinsurance (including health, motor, property, etc.) | 5% |
| Life insurance and life reinsurance | Exempt |
VAT on Financial Services
| VAT on Financial Services | VAT Rate |
| Margin-based products (products not having an explicit fee, commission, rebate, discount or similar | Exempt |
| Products with an explicit fee, commission, rebate, discount or similar | 5% |
| Interest on forms of lending (including loans, credit cards, financial leasing) | Exempt |
| Issue, allotment or transfer of an equity or debt security | Exempt |
VAT on Transportation Services
| VAT on Transportation | VAT Rate |
| Domestic passenger transport (including flights within the UAE) | Exempt |
| International transportation of passengers and goods (including intra-GCC ) | 0% |
| Supply of a means of transport (air, sea, and land) for commercial transportation of goods and passengers (over 10 people) | 0% |
| Supply of goods and services relating to these means of transport and to the transportation of goods and passengers | 0% |
Sector VAT News Update
Financial Services
Financial services, namely Banking, will attract either Zero or will be exempted. The exempt nature of the financial services will have a negative impact on profitability for this sector as they cannot claim tax from their customers but will have to bear the burden of input tax. A Gulfnews analysis article discusses this: Read here
Sector impact analysis is provisional based on the GCC Draft and may change when the country issues the relevant VAT laws.