VAT Public clarification on Manpower vs Visa Facilitation services
VAT Public clarification on Manpower vs Visa Facilitation services
The Federal Tax Authority has released a public clarification on the treatment of Manpower services vs Visa Facilitation services (VATP038) today.
It is a common practice in UAE Corporate Groups that the employment visas are held by one Company (Supplier) while the employees work under the supervision and control of another entity (Recipient). The public clarification provides guidance on the distinction between Manpower services and Visa Facilitation services and the value of supply for both these services.
The public clarification further explains the treatment of Visa facilitation services where the services are not provided at market value or for no charge to the Recipient.
Our Insights
The clarification on the value of supply for Visa Facilitation services to exclude employee salaries, is a welcome development for many Corporate groups in the UAE with such arrangements. It is prudent for all the UAE businesses to revisit the positions adopted in light of this public clarification issued by the FTA.
The clarification around free services offered to Related parties could impact businesses in various sectors.
If you would like to reassess your VAT position on transactions with Related Parties, please feel free to contact one of our Tax experts.