KSA – Clarification on VAT in Educational Sector

General

ZATCA published a clarification on the mechanism of the VAT treatment of educational services offered to citizens of Saudi Arabia.

Clarification

The Government of Saudi Arabia with Royal Decree No. A/86, dated January 6, 2018, provided that a mechanism should be establish such that the Government will bear the V.A.T burden of private sector education services offered to Saudi citizens.  Institutions should charge V.A.T but pass this burden on to the Government and maintain their ability to claim input tax credits.  In that way Saudi nationals should not face tax.

ZATCA with its clarification confirms that the state bears the V.A.T due on private educational services provided to citizens, which includes the value of tuition fees including the value of textbooks sold by
private and international schools that are subject to tax and approved by the Ministry of Education.

The authority also confirmed that the educational services included in the scope of the application of the royal order also include educational services provided by
private universities (for bachelor’s degrees) that fall under the supervision of the Ministry of Education, in addition to the educational and training programs that
are supervised by the Technical and Vocational Training Corporation (TVTC), which is equivalent to the corresponding and similar educational certificates included in the scope of application of the royal order at the Ministry of Education, which is more than two years of training.

ZATCA clarified that the mechanism for applying the state’s tax liability is agreed upon between the authorities concerned with implementing the aforementioned royal order.
The above stipulates that the tax on covered educational services shall not be collected from the citizens who benefit from them.
The educational institution should verify the applicability of the Royal Order to the recipient of services and issue a tax invoice to the the Saudi citizen without VAT, including the national identity number and his contact information.
The educational institutions shall declare the value of the supply included in the scope of application of the royal order within the field designated for it in the declaration.