The Federal Tax Authority has issued a public clarification regarding the treatment of Manpower services and Visa Facilitation services under VAT (VATP038).
It is common for UAE Corporate Groups to have one company (Supplier) holding the employment visas while the employees work under the supervision and control of another entity (Recipient). The clarification provides guidance on the distinction between Manpower services and Visa Facilitation services and the value of supply for both these services.
Although the clarification discusses VAT-related matters specifically, there could be certain Transfer Pricing (TP) implications around the same. We have provided our insights on the interplay of VAT and TP relevant to the aspects discussed in the clarification. It is advisable for all UAE businesses to review their positions in light of this public clarification.
Please connect with one of our Tax experts for support with VAT & Transfer Pricing analysis.
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