Regulations do not permit private schools, both foreign and private, to increase their tuition fees with the introduction of the Value Added Tax (VAT) next January, said Malek Ghazi bin Taleb, head of the Private Schools Committee at the Jeddah Chamber of Commerce. Private schools will have to wait until next year to apply for permission to increase school fees. If the application is accepted, the increase will take effect only in the year following the next. Bin Taleb told Al-Riyadh that small private schools with low tuition fees will be affected by VAT more than private schools charging high fees. The tax will be calculated on the total income of the school from both tuition and transportation fees, but it was not clear as yet which party would pay the tax – the students or the school. He renewed the demand for an increase in the annual subsidy extended to private schools by the state. The subsidy has not been increased for 40 years, although several developments call for such an increase. Small investors are finding it increasingly difficult to continue in this field, he said. VAT will take effect on January 1, 2018, at a rate of 5 percent to be paid by all active private companies in Saudi Arabia.
