Page 6 - ICAI UAE TAX UPDATE_JUNE 2024

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

stamping, and Emirates IDs. Company B handles the
employee contracts, salary, benefits, and supervision.
• In this case, Company A is considered to be providing
visa facilitation services as long as it does not perform a
centralized HR function for the corporate group.

Consideration: Includes the full amount received by the Consideration: Consists of any amount charged for the
employer from the service recipient. This encompasses visa facilitation process, including fees for visa services.
amounts recharged by the supplier to the customer and
amounts paid directly by the customer to the employees
(such as salaries and benefits).

Valuation: Valuation:
The value of supply includes the total amount incurred • The consideration for the supply of visa facilitation
by the customer, including salaries, benefits, and any services is the amount charged for the services which
additional charges related to the services provided by the could include the recharge of expenses such as typing
supplier. fees, medical tests and issuance of employee Emirates
IDs.
Example: If Company A supplies manpower to Company • The value of supply in this case excludes the employee’s
B, Company A must account for output tax on the full salary, annual flight allowance and any other monetary
value of the supply. benefits, as these are the obligation of the customer.
Valuation when the Facilitator does not charge a market-
related fee:
• If the Facilitator charges a fee that is less than market value
and the Customer is not entitled to full input recovery, the
value of supply is the market value of the supply.
• If the Facilitator charges the Customer a fee that is equal
to the market value of the supply, the fees charged would
be regarded as consideration for the taxable supply of
services

Valuation when the Facilitator does not charge any fee:
If the Facilitator provides the visa facilitation services to
its customer for no charge, the supply would constitute
a deemed supply unless one of the relevant exceptions
applies:
• If no input tax credit related to these services are
recovered, these services will fall out of scope of VAT.
• If input tax credit related to these service are recovered,
the output VAT should be paid based on total cost (Direct
Cost + Indirect Cost).
• In instances where the Facilitator is unable to calculate the
cost of providing the visa facilitation service, the market
value of similar services may be used as an indication for
the value of the supply.

* Corporate group requirement, for this purpose, refers to companies operating within the same corporate structure,
which includes common ownership of the companies in line with Article 9(2) of the Executive Regulation. If the
facilitator and customer are not part of the same corporate group, supply in such a case is treated as a supply of
manpower services. If the facilitator and customer are part of the same VAT group, the supply would fall outside the
scope of VAT in such cases, considering them as same person.

Understanding the distinction between manpower services and visa facilitation services, as well as their respective
VAT treatments, is crucial for businesses that engage in these activities.
*For more details, refer to the official public clarification issued by the Federal Tax Authority.
6 www.icaidubai.org

UA E TAX U PDAT E NEWSLET TER ISSUE 03 - June 2024