Page 5 - ICAI UAE TAX UPDATE_JUNE 2024

3 UAE TAX UPDATES
3.1 VAT Public Clarification on Manpower Vs Visa Facilitation Services - Synopsis

The Federal Tax Authority (FTA) issues public clarifications to provide guidance on specific VAT treatments. These
clarifications help businesses understand how to apply VAT rules correctly to different types of services. Here,
we will go through the key points from the recent clarification VATP038 issued by the FTA regarding manpower
services and visa facilitation services – nature of these supplies as well as the application of relevant valuation rules.
Key points from FTA clarification

Manpower Services Visa Facilitation Services
Definition: Manpower Services involves the identification, Definition: Visa Facilitation Services are administrative
recruitment, and hiring of candidates, making employees services to facilitate the employment visa process for
available to work for another entity. employees hired by another entity, without making these
employees available to that other entity.

Conditions: Conditions:
• Supplier responsible for employment obligations, • The employment visa holder (Facilitator) and the
including salaries and benefits. customer are part of the same corporate group* but are
• Supervision and control by the supplier, including not part of the same tax group.
assigning tasks and evaluating performance. • The Facilitator’s business activities do not include the
• Furthermore, supervision and control also include supply of manpower.
establishing the nature of each employee’s work • The Facilitator is not responsible for any of the obligations
and working hours as well as directing and guiding related to the employee.
employees. • The Facilitator sponsors these employees to exclusively
work for, and under the supervision and control, of the
Customer.
Example:
• Company A provides support services to Company B
(part of same corporate group), including bookkeeping,
payment processing, collections, and holding employment
visas for Company B’s employees.
• Company A arranges visa issuance, medical tests, visa

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