Entities can recover input taxes if they are not in the blocked category

The Federal Tax Authority (FTA), has confirmed that higher educational institutions making only zero-rated and standard-rated supplies may recover input tax in full, except where recovery is specifically blocked. Blocked input tax includes value-added tax (VAT) incurred on certain entertainment services, and motor vehicles that have been purchased, leased, or rented and made available for personal use, the FTA said yesterday.

The Authority noted that higher education institutions providing exempt supplies are eligible to recover only a portion of the input tax incurred.

Supply of material

The FTA’s Basic Tax Information Bulletin focuses on the tax treatment for the higher education sector in respect of universities and higher education institutions recognized by the competent federal or local government entity regulating the higher education sector where the course is delivered.

Moreover, these higher education institutions may obtain zero-rate educational ser-vices supplied in accordance with a curriculum recognized 10 by the government, provided the institution is either owned by the federal or local government or receives more than 50 per cent of its annual funding directly from the federal or local government (qualifying institution).

 The bulletin said the supply of printed and digital reading material related to an ap-proved curriculum shall be subject to the zero-rate if the supplier is a qualifying institution. The bulletin also noted that the transportation of students from home to the location of the higher education institution, and vice versa, is exempt from tax.

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News courtesy : Gulf News