ZATCA Issues Circular Clarifying VAT Treatment for Private Educational Services in Saudi Arabia

Riyadh, KSA, January 2024 : The Zakat, Tax and Customs Authority (ZATCA) has recently released a comprehensive circular on its official website, elucidating the Value Added Tax (VAT) treatment of private educational services extended to Saudi citizens. 

Key Points from the Circular:

1. Royal Order A/86: In accordance with Royal Order no. A/86 issued on 18/4/1439 H, corresponding to April 4, 2018, the Saudi Arabian government has decided to bear the VAT costs associated with private education services for Saudi nationals.

2. Eligible Persons: Individuals holding Saudi Arabian nationality are eligible for the VAT exemption when availing 'qualified private educational services.'

3. Qualified Private Educational Services: Eligible services include private and international schools accredited by the Ministry of Education, private universities falling under the Ministry of Education's supervision for Bachelor’s degree programs, and faculties offering programs equivalent to Ministry of Education certificates with durations exceeding two years.

4. In-scope Private Educational Services: The circular specifies that in-scope services are those provided by qualified suppliers, covering tuition fees and textbooks. However, non-mandatory educational services for citizens, voluntarily obtained and provided, are excluded. This includes courses and programs with durations of one month or less up to less than two years, where the citizen is responsible for payment.

5. Obligations of Private Education Service Providers: Private education service providers are mandated to:

   • Issue tax invoices containing the national ID number and contact details of the benefiting citizen.
   • Maintain records for VAT audit purposes.
   • Report supplies related to these services in periodic VAT returns.
   • Comply with e-invoicing regulations.

Taxpayers involved in offering private education services are strongly advised to review their current VAT practices in light of the clarifications provided by ZATCA. Corrective actions, if needed, should be taken within the extended amnesty initiative period to avoid penalties in case of non-compliance. This circular provides valuable insights for businesses to align their operations with the latest regulatory requirements.

For further details and guidance, interested parties are encouraged to refer to the full circular https://zatca.gov.sa/ar/MediaCenter/Publications/Documents/VAT_Publication.pdf