Are Tuition Fees VAT-Exempt? NIRC Section 109(H) Rules for Schools

Tuition and other academic fees charged by a private school duly accredited by DepEd, CHED, or TESDA — or by any government educational institution — are exempt from 12% VAT under NIRC Section 109(H). The exemption is tied to two things at once: the institution’s accreditation status, and the nature of the specific fee as an educational service. Income a school earns outside that core educational activity doesn’t automatically ride along on the same exemption.

What does Section 109(H) actually exempt? #

Section 109(H) exempts educational services rendered by accredited private schools and government schools — the core statutory language behind every private school’s tuition invoice being VAT-free reads:

“Educational services rendered by private educational institutions, duly accredited by the DepEd, CHED, TESDA and those rendered by government educational institutions.”

This sits inside the broader Section 109 list alongside agricultural products, medical services, and residential leases; for the complete list, see VAT-Exempt Transactions Under NIRC Section 109. The exemption covers tuition fees, matriculation fees, and other school fees that are genuinely part of the educational service itself — laboratory fees, library fees, and similar academic charges are generally treated the same way as tuition for this purpose.

The accreditation requirement is doing real work in this provision: a school has to actually hold current accreditation from DepEd (basic education), CHED (higher education), or TESDA (technical-vocational education) — or be a government school — to claim the exemption. A learning provider that isn’t accredited by any of the three, even if it calls itself a “school” or “academy,” doesn’t automatically fall under Section 109(H) on its fees.

Where does the exemption stop — what income isn’t covered? #

The BIR has consistently drawn a line between a school’s core educational-service income, which is exempt, and its incidental or commercial income, which generally is not — the exemption exists so long as the institution isn’t engaged in the regular conduct of a commercial or economic activity beyond education. Common examples of school-related income that practitioners typically treat outside the Section 109(H) exemption include:

• Rentals received from a canteen or bookstore concessionaire operating on campus
• Proceeds from disposing of school vehicles, equipment, or other assets no longer used for operations
• Facility rentals to outside groups (gymnasium or hall rentals to non-students) that aren’t part of the school’s own instructional program

This matters practically because a school with meaningful non-tuition revenue streams can’t assume its entire gross receipts are VAT-exempt just because its primary business is education — each revenue line needs its own classification, the same discipline this site’s other Section 109 deep-dives apply to mixed-product sellers. See Are Private Schools Tax-Exempt? How the BIR Taxes Nonstock vs. Proprietary Schools for the separate (and easily confused) question of whether the school itself pays income tax on its net earnings — accreditation-based VAT exemption on tuition and income-tax exemption on the institution are two different tests governed by two different NIRC provisions.

How Section 109(H) relates to VAT on digital/online education #

The same DepEd/CHED/TESDA accreditation test that governs traditional tuition also governs the VAT exemption for online courses under Republic Act No. 12023’s digital-services VAT framework — an accredited institution’s online course, seminar, or training generally falls under the same educational-services exemption as its in-person classes, while an unaccredited online course provider does not. This site covers that specific angle in depth in Is Your Online Course VAT-Exempt? RA 12023’s Education Carve-Out Explained — the two posts are companions: this one covers the traditional tuition/accreditation framework under Section 109(H) itself, and that one covers how the framework was carried into the newer digital-services VAT law.

Worked example: a private school with mixed revenue #

A DepEd-accredited private high school reports the following gross receipts for a quarter:

The school’s ₱8.6 million in tuition, lab, and library fees stays outside output VAT entirely. Its ₱450,000 in canteen rental and gym rental income is analyzed separately; if that VATable income exceeds the ₱3,000,000 VAT-registration threshold on its own, the school would need to VAT-register for that portion of its activity and remit output VAT on it, even while its core tuition revenue — regardless of size — remains exempt under Section 109(H).

Frequently asked questions #

Are private school tuition fees subject to VAT? #

No. NIRC Section 109(H) exempts educational services rendered by private educational institutions duly accredited by the Department of Education (DepEd), the Commission on Higher Education (CHED), or the Technical Education and Skills Development Authority (TESDA), and by government educational institutions, from the 12% value-added tax.

Does a school need government accreditation to qualify for the VAT exemption? #

Yes. The exemption under Section 109(H) is tied to accreditation by DepEd, CHED, or TESDA (or being a government educational institution). A learning provider operating outside that accreditation framework — a private tutorial center or review course not accredited by any of the three agencies, for example — does not automatically qualify for the same VAT exemption on its fees.

Is a school’s canteen or bookstore income also VAT-exempt? #

Not automatically. The Section 109(H) exemption covers educational services — tuition, matriculation, and similar academic fees. Income the school earns from activities outside the direct rendering of education, such as rentals from a canteen concessionaire or sales of school assets, is generally analyzed separately and can be subject to VAT depending on the facts.

Is this the same exemption that covers online courses under RA 12023? #

It’s the same accreditation-based framework extended to a new delivery method. Republic Act No. 12023’s VAT-on-digital-services law carried the DepEd/CHED/TESDA accreditation test into online courses, seminars, and training offered by accredited institutions, so a traditional school’s in-person tuition and its accredited online-course fees are analyzed under the same underlying educational-services exemption.

Does the VAT exemption on tuition affect the school’s own input VAT? #

The exemption applies to the school’s output side — it doesn’t charge output VAT on exempt tuition — but VAT the school pays on its own purchases (input VAT) related to that exempt educational activity generally isn’t creditable the way it would be for a VAT-registered seller of taxable services. That input VAT is typically treated as part of the school’s cost or expense instead.

Summary #

NIRC Section 109(H) exempts tuition and other core academic fees from VAT for schools accredited by DepEd, CHED, or TESDA, and for government educational institutions — but the exemption tracks the educational service itself, not everything the institution happens to earn. Canteen rentals, asset disposals, and other incidental income generally sit outside the exemption and need to be evaluated on their own facts. For the income-tax side of school taxation, see Are Private Schools Tax-Exempt?, and for the full Section 109 exemption list, see VAT-Exempt Transactions Under NIRC Section 109.