The UAE Federal Tax Authority (FTA) issued VAT Public Clarification VATP038 on 31 May, 2024. This guidance clarifies the VAT treatment between manpower services and visa facilitation services.
The clarification tackles complexities companies encounter when classifying transactions related to employment visas and determining the appropriate VAT consideration. It provides guidelines on determining the nature of these supplies as well as the application of the relevant valuation rules.
The identification/recruitment/hiring of candidates and making such employees available to work for any other entity would, generally, be regarded as the supply of manpower services, unless certain conditions are met.
In the case of manpower services, the consideration is the full amount received (or expected to be received) by the employer (“Supplier”) from the recipient of the service (“Customer”). This includes all amounts recharged by the Supplier to the Customer and amounts directly paid by the customer to the employees (such as salaries and benefits).
In the case of visa facilitation services, the consideration consists of any amount charged for the process to facilitate the visas of natural persons effectively employed by another person, e.g. the fee charged for the visa services.
