Under the UAE VAT law, preventive and basic healthcare services and qualifying education services are zero-rated, which means 0% VAT with the right to recover input tax. The education rule applies to government-owned or government-funded institutions and is read strictly. Private schools and many other services fall outside it and generally charge 5%.
The rule in the law
Article 45 of Federal Decree-Law No. 8 of 2017 lists supplies that are zero-rated, including education and healthcare. The detail sits in Cabinet Decision No. 52 of 2017, the Executive Regulation, and in the FTA's sector guides. Zero-rated supplies are taxable at 0%, not exempt. The supplier stays in the VAT system and can recover VAT on its costs. That is very different from an exempt supply, where recovery is blocked. See zero-rated vs exempt vs out of scope.
Healthcare
Zero-rating applies to preventive and basic healthcare services and related goods and services, as the Executive Regulation specifies. Commentary describes the scope as services supplied by facilities licensed by the relevant health authority. Cosmetic treatments and similar non-essential services do not qualify. The scope depends on the Executive Regulation wording and FTA guidance, so check a service line by line before you invoice at 0%.
Education
The education zero-rating covers qualifying nurseries, schools and higher education institutions that are owned or funded by the federal or local government. Law firm commentary lists several points:
- The institution must be recognised by a federal or local authority.
- The curriculum must be recognised by the competent authority in the emirate.
- For higher education, the institution must be government-owned or receive a major share of its funding directly from government.
- Standalone skills courses and non-degree training are likely to fall outside it.
Private schools and many private universities usually charge 5% on tuition. Ancillary items are treated one by one: course materials and curriculum-linked trips can follow the zero-rating, while uniforms, electronic devices and food are generally standard-rated.
Quick comparison
| Supply | Typical VAT treatment |
|---|---|
| Preventive or basic care at a licensed facility | 0% |
| Cosmetic treatment | 5% |
| Government school tuition | 0% |
| Private school tuition | 5% |
| Uniforms and devices sold by a school | 5% |
| Short skills course | 5% unless it qualifies |
Registration and recovery
Providers that make zero-rated supplies count them toward the registration threshold. Because zero-rated supplies are taxable, a provider can register and recover input VAT on rent, equipment and supplies. A clinic that mixes zero-rated and standard-rated services must apportion carefully. See the registration threshold and conditions to claim input VAT.
Invoicing and records
Show the supply as zero-rated on the invoice and keep evidence for the classification, such as licences and recognition certificates. Where one invoice includes zero-rated and standard-rated items, show each separately. Record the treatment in your VAT working papers so a review can follow your reasoning. Our VAT health check tests this kind of classification.
A mixed clinic example
A clinic provides a consultation that qualifies as basic healthcare and also sells a cosmetic procedure. The first is zero-rated and the second carries 5%. The clinic buys equipment, rent and supplies for both. Because both are taxable supplies, the clinic can recover input VAT on all costs, subject to the usual conditions, as neither supply is exempt. The record-keeping burden is in splitting the revenue correctly. If a bundled package combines both, the price must be apportioned on a reasonable basis and shown on the invoice.
A private school example
A private school that does not qualify for the government-funded zero-rating charges 5% on tuition, so it registers and recovers input VAT on its costs. Parents who pay fees therefore bear 5%. A government-funded school that does qualify charges 0% on tuition and recovers its input VAT, and parents bear no VAT on the tuition. The treatment of extra services such as transport, meals, uniforms and trips needs to be checked item by item.
Training providers and nurseries
Commercial training centres, short courses and tutoring usually fall outside the education zero-rating and charge 5%. Nurseries need particular care, since the zero-rating depends on whether they are recognised and, for private nurseries, how they are funded. Check the FTA's education sector guide and your licensing authority's classification before you set prices.
Common errors
- Treating all medical services as zero-rated without checking which are preventive or basic.
- Assuming a private school with a recognised curriculum qualifies.
- Zero-rating uniforms or devices because they are sold with tuition.
- Leaving the registration late because revenue is thought to be exempt.
- Not apportioning mixed packages.
If you have already made one of these errors, see VAT voluntary disclosure and VAT penalties.
Do providers need to register?
A provider whose supplies are all zero-rated is still making taxable supplies, so it counts them toward the threshold and can register voluntarily below it. Registering brings the right to recover input tax, which for a clinic or school with heavy equipment and rent costs can be a meaningful cash benefit. A provider with mainly exempt supplies would not get that benefit. Before you decide, list your supplies, classify each one and compare the VAT you would recover with the cost of compliance. See the registration threshold.
Showing zero-rated supplies on the return
Zero-rated sales appear on the VAT return in their own box, separate from standard-rated sales. The FTA reviews returns with a high share of zero-rated sales more closely, since refunds often result. Keep the documents that prove the classification, such as licences, recognition letters, contracts and fee schedules, for the retention period. See VAT refund in the UAE.
If the classification changes
An institution's status can change. A school may lose government funding, a clinic may add cosmetic services, or a nursery may change its recognition. When the facts change, the VAT treatment changes from that date. Review your classification each year and when you launch a new service, and correct past errors through the voluntary disclosure process if needed. See VAT voluntary disclosure.
Sector guidance to read
The FTA publishes sector guides, including for education and healthcare, and public clarifications on specific questions. These documents are updated from time to time. Always check the current version, and consider asking the FTA for a clarification when your situation is unusual. See FTA private clarifications.
Frequently asked questions
Preventive and basic healthcare services and related goods and services are zero-rated under Article 45 and the Executive Regulation. Cosmetic and non-essential services are not.
Qualifying education from government-owned or government-funded institutions is zero-rated. Private school tuition generally carries 5%.
Zero-rated supplies are taxable at 0% and allow input VAT recovery. Exempt supplies carry no VAT but generally block recovery.
It charges 5% on tuition, so it can recover input VAT on costs related to those taxable supplies, subject to the usual rules.
Commentary indicates they are standard-rated at 5%, although some course materials may follow the zero-rating.
In Article 45, Cabinet Decision 52 of 2017 and the FTA's sector guidance on education and healthcare.