Dear ISG Parent,

Following a public consultation in July and August, the Kingdom of Saudi Arabia (KSA) released final VAT regulations through the tax authority (GAZT) website on 29th August 2017. This follows an earlier consultation process and the publishing of a domestic VAT law in July. The regulations, the law and the finalized GCC Framework Agreement form the entire foundations for the introduction of VAT across all sectors in Saudi Arabia from 1st January 2018.

The main VAT obligations will take effect from 1st January 2018: VAT must be charged on supplies made after this date, and tax invoices must be issued for all taxable supplies.

The regulations reflect that Saudi Arabia has chosen a broad tax base: with VAT applying to almost all supplies of goods or services, subject to limited exceptions. For information, the table provided illustrates the VAT treatment of supplies made in some sectors in the KSA including education.

Saudi Arabia

Financial Services Fee based services: taxable Margin based services: exempt

Insurance All non-life insurance: taxable Life insurance: exempt

Food items All taxable

Education* Taxable

Health Taxable

Real Estate Residential rental: exempt All other real estate: taxable

Local transport Taxable

Oil and Gas All taxable

International Transport zero-rated

* As a provider of private education ISG tuition fees and services will be subject to VAT. Services provided by public education and health providers in the KSA may not be subject to VAT.

As a valued ISG parent your readiness to comply with these new regulations will be critical to ensure the successful implementation of VAT. Therefore the following points are being raised for your attention:

● Tuition fees

ISG will be required to amend tuition fees in line with the introduction of VAT. Tuition fees, if already paid for the period beginning 1st January 2018, will be subject to a 5% VAT. Please note, you will be issued with an invoice for the application of VAT to tuition fees from this date onward.

● Goods and services

Goods and all services, provided on ISG school campuses, will also be subject to VAT, e.g. items purchased at the Academy Store, Dining Hall, Joffrey’s, Little Learners/Nursery fees, extra-curricular activities etc. Please note that invoices will be issued for the VAT chargeable on Little Learners/Nursery fees covering the period from 1st January 2018.

ISG will continue to provide you with periodic updates throughout the VAT implementation process. If you have any specific queries, please contact ISG Finance Office via email at finance@isg.edu.sa. Thank you for your continued support.

Eddie Liptrot, ISG Superintendent

Dirk de Jager, Chief Financial Officer