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Some HEIs accept paying Indian GST to agents

Universities in Australia, Ireland and Canada have begun paying Indian GST passed onto them by their agents, but controversy and frustrations remain as providers work out how to apply the tax, and other Anglophone destinations hold out.

Some universities have begun paying GST, but not without controversy and frustration. Photo: Charlie CostelloSome universities have begun paying GST, but not without controversy and frustration. Photo: Charlie Costello

Stakeholders told The PIE early adopters "broke rank" and consequently pressured other universities to pay the GST

A PIE News investigation has uncovered that all Irish, most Australian and some Canadian universities have agreed to pay the additional 18% tax on their commissions to agents.

“We have no chance of getting the money back if [the high court challenge] is in our favour”

New Zealand universities, meanwhile, continue to wait on a final resolution to challenges in India’s high court before making a decision, and the US and UK institutions continue to refuse to pay.

The latest decision is a somewhat positive outcome for agents, who have conducted a multifrontal campaign to have their services exempt from GST or have their university partners pay on their behalf. When the tax was introduced in July 2017, many said the higher bills would put them out of business.

But getting to this point has been scattershot. Both Ireland and New Zealand have had extensive sector-wide consultations facilitated by the Irish Universities Association and Universities New Zealand,  while Australia has consulted but not come to a uniform conclusion.

Spokespeople from the Canadian Bureau for International Education and Universities Canada told The PIE they had not looked into the matter, but Lakshmi Iyer, head of education at Sannam S4, confirmed some Canadian providers were paying, albeit without consistency across the sector.

In the US, AIRC executive director Mike Finnell said there had been discussion at the Council’s conference, during which members had brought up that agents were including the GST on invoices. But Finnell was not aware of any providers paying.

During the discussions, Mary Marquez Bell, vice president for enrolment services at State University of New York, said she did not believe the university could accommodate the additional costs.

The result hasn’t come without controversy and tensions have formed between Australian providers. Several higher education stakeholders told The PIE early adopters “broke rank” and consequently pressured other universities into paying the GST.

“They will find themselves not able to obtain students from their long-established, reliable… agents”

Several more aired frustrations over now paying GST, with one source who wished to remain anonymous, saying that the latest court challenge was not finalised and paying now might come back to bite providers.

“There is no definitive high court ruling, and we have no chance of getting the money back if it is in our favour,” they said.

According to Douglas Proctor, director of international affairs at University College Dublin, there was “no easy solution” for Ireland, and universities had accepted paying both Irish VAT and Indian GST in the short-term would benefit the sector.

IEAA chief executive Phil Honeywood echoed Proctor’s sentiments, adding there were significant pressures on Australian providers considering their reliance on education agents.

“Providers who argue against having to pay this tax impost, they will find themselves not able to obtain students from their long-established, reliable… agents,” he said.

However, the claims by Australian stakeholders that those who paid early did so without considering the implications of the new law appear unfounded. An internal email obtained by The PIE from one of the first universities to begin paying GST provides an extensive rationale.

Among other arguments, it points out admission services for post-secondary providers were removed as an exemption from the previous services tax in April 2017, arguing against the belief that there is precedent for exempting agents from GST.

Many institutions had stipulated they would not be responsible for local taxes in their contracts with agents

It also observes the location of service delivery is the primary consideration for applying GST, and as the agents are based in India, the Indian government’s taxation is applicable.

While this interpretation may provide a clear-cut path for universities around the world to pay Indian GST, individual agreements between institutions and agents further complicate the issue.

During AIRC’s conference, Andre Cordon, international admission director of PACE University in the US, said his contracts didn’t stipulate additional fees and taxes, and asked agents to remove the GST before saying an exception would not be made for India.

Sannam’s Iyer, meanwhile, told The PIE many institutions specifically stipulated in their contracts with agents they would not be responsible for local taxes.

These stipulations have driven concerns from providers that paying tax for Indian agents would set a precedent for doing so in other countries, a point not lost on either Irish or Australian universities, which are currently trying to figure out the best way to apply Indian GST to their commission.

Some Irish universities have apparently toyed with reducing commission rates to distribute the cost between themselves and the agent – though the likelihood of agents accepting that is low – and Australian universities have considered increasing their commission rates to hide the tax hike.

AAERI has pledged to continue to lobby the Indian government to waive GST as either an export of service or an education service.

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