Saudi Arabia: Circular on Private Educational Services Provided to Saudi Citizens and VAT treatment

In brief

The Zakat, Tax and Customs Authority (‘ZATCA’) published a Circular on its official website explaining the VAT treatment of private educational services provided to Saudi citizens.

The Circular, issued in Arabic language at the moment, can be accessed here. 

In detail

Pursuant to Royal Order no. A/86 issued on 18/4/1439 H corresponding to 4 April 2018, whereby the KSA Government announced to bear the VAT cost related to private education services for Saudi Nationals. This circular covers i) the eligible persons who can avail the benefit of not being charged VAT vs. applying 15% VAT rate ii) the qualified private educational services suppliers to apply this benefit, iii) the private educational services in scope and iv) the obligations on suppliers of such services.

Eligible persons:

Any person who holds “Saudi Arabian nationality” and benefiting from ‘qualified private educational services’. 

The qualified private educational services:

• Private and international schools accredited by the Ministry of Education

• Private universities that fall under the supervision of the Ministry of Education - Bachelor’s degree.

• Faculties offering educational and training programs supervised by the Technical and Vocational Training Corporation that are equivalent to educational certificates provided by at the Ministry of Education with duration exceeds two years of training.

The private educational services in scope:

• The services provided by the qualified suppliers that include the value of tuition fees and textbook sold by them.

• Exclusions include: non mandatory educational services for citizens that are obtained and provided voluntarily such as courses and programs with duration of one month or less up to less than two years.

• The State’s responsibility is limited to cases where the citizen is responsible for paying for such services.

Obligation of Private Education service providers:

• Issue tax invoices that contain the national ID number and contact details of the citizen benefiting from such services.

• Keep records of the same in case of VAT audit purposes.

• Report the supplies related to such services in the periodic VAT returns in the relevant field. 

• Comply with e-invoicing regulations.