Parents in the UAE will not have to pay value-added tax (VAT), which was introduced on January 1, 2018 in the country, on school bus fees, according to VAT implementers and transport services.
VAT, a form of indirect and general consumption tax, has been set at the rate of five per cent on a majority of goods and services in the UAE.
The tax-included price will be borne by the end user and collected by intermediaries on behalf of the government, along the supply chain.
Meaning thereby that school transport services will have to absorb VAT on fuel and spare parts, without passing on higher costs to parents
When it comes to “Transportation”, the FTA document notes that “domestic passenger transportation (including flights within UAE)” is “exempt”.
In an email to parents last week, School Transport Services (STS), which transports over 72,000 students everyday on some 1,800 buses for around 65 schools in the UAE, said: “Our understanding is that the provision of School Transport Services (School Transport Fees) shall be exempt from VAT.”
Some schools, such as Indian High School (IHS) in Dubai, manage their own school bus transport service. IHS says on its website that “we have a fleet of 165 school buses that transport more than 10,000 students every day to and from school”.
However, operational and running costs such as fuel and spare parts of the school bus transport service will rise by five per cent, he pointed out. The school will have to absorb the higher cost.
“Consider, for example, the expenses that we have incurred for the buses, such as petrol expenses: if you buy petrol, you have to pay five per cent VAT. That input — VAT — we cannot claim. We cannot pass it on, or we cannot get a refund from the government. Operational costs of school bus transport service will be increased by five per cent [next year onwards], but the income will be the same.”
The news not passing on the Vat to end users comes as a huge relief to most parents following in the heels of UAE’s biggest school bus operator, School Transport Services (STS), hiking bus fees, citing higher operational costs and adherence to tighter safety standards, early last year.
STS which transports 72,000 students every day on 1,800 buses for 65 schools in the UAE, had raised monthly bus fees by around Dh30 to Dh40.
Citing past STS circulars, parents has remarked that the hike is the biggest since 2014, when monthly bus fees went up by Dh10.
The latest hike of Dh30 per month surfaced in February 2017 forcing parents to pay bus fees for remaining 10 months of the schooling year.
According to Col (Retd) Augustine, managing director of STS, in a statement to Gulf News had then remarked that the bus fees had been increased due to steeper operational and fuel costs, and to maintain high safety standards.
He said, “The safety and well-being of our passengers are of the utmost importance to us. Consequently, we have invested in various safety features, such as advanced electronic attendance system, monitoring of all buses from the control room, video surveillance system, sleeping child check button, etc; creating a very high benchmark in the school bus industry.
In order to maintain the current safe, reliable and efficient transport service for students, with the increased cost of operation and fuel price, we have made a slight adjustment in the transportation fees.”
Source: Gulf News