The Federal Tax Authority (FTA) has recently issued VAT public clarification VATP038- Manpower vs Visa Facilitation Services. The key areas covered in the said public clarification are:

  • Supplies qualifying as Manpower services;
  • Value of supply for Manpower services;
  • Supplies qualifying as Visa Facilitation services;
  • Value of supply for Visa Facilitation services;

For ease of reference, we have summarized below the key areas:

A. Supplies qualifying as Manpower services:

  • The identification/recruitment/hire of candidates and making such employees available to any customer would, generally, be regarded as a taxable supply of manpower
  • Under Manpower services, the supplier is generally responsible for all the employment obligations including payment of salaries and other benefits.

The supplier would also be generally responsible for supervision and control of such employee.

B. Value of supply – Manpower services:

The consideration for supply of manpower includes the full amount received or expected to be received from the customer that is either:

    • recharged to the customer by the supplier (i.e. additional costs relating to the provision of manpower services), or
    • directly paid to the employees by the customer (i.e. salaries, wages, and employee benefits)

C. Supplies qualifying as Visa facilitation services:

A supply would qualify as a supply of Visa facilitation services if all the below mentioned requirements are met:

Condition Explanation
Corporate group requirement
  • The facilitator and customer must be part of the same corporate group, but are not part of the same tax group. (Supplies are disregarded in case facilitator and customer are part of same tax group).
  • Corporate group 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 of UAE VAT Law which outlines relationship from economic, financial, and regulatory aspects.
General business activity should not be supply of manpower services
  • The facilitator’s business activities should not include the supply of manpower.
  • The term “business activities” is not limited to the activities stated on the Facilitator’s commercial or trade licence, and activities listed as part of its VAT registration, or any internal documentation.
  • If the facilitator supplies any manpower services to any person, this condition would not be met.
Employee obligations
  • The facilitator should not be responsible for any of the obligations related to the employees for example payment of employee’s salary and other monetary benefits, provision of medical insurance and accommodation, etc.
  • The facilitator’s obligations should be limited to incurring the cost relating to obtaining the employment visa.
Employment, supervision, and control by the Customer
  • The facilitator should sponsor these employees to exclusively work for, and under the supervision and control, of the customer.
  • In case the employee performs his/her work duties for the Customer in addition to other companies in the corporate group, this condition would not be met.


D. Value of supply – Visa facilitation services:

  • The consideration for the supply of visa facilitation services-
Inclusions Exclusions
Recharge of expenses such as-

  • typing fees,
  • medical tests
  • issuance of employee Emirates IDs.
  • employee’s salary,
  • annual flight allowance and
  • any other monetary benefits

Above are Customer’s obligations


  • Special valuation:

  • Value of Supply – Related parties:
    • 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
  • Value of Supply – No fee is charged:
    • 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 the Facilitator recovered any input VAT to supply the visa facilitating services, the Facilitator will be required to account for the output VAT due based on the total cost incurred to make the supply, including direct and indirect costs.

 PKF Comments:

  • FTA has provided a clear distinction between Manpower Services and Facilitation of Visa services.
  • If any of the specified requirements for Facilitation of Visa services are not met, such supply will be regarded as supply of Manpower Services.
  • The mechanism for valuation of both categories of taxable services i.e. Manpower and Visa Facilitation Services is clearly specified and VAT would accordingly require to be applied on the same.
  • Considering FTA has released the document as Public Clarification, the same would be applicable since introduction of VAT in UAE. Resultantly, Tax payers need to carefully assess and ascertain that the subject taxable supplies have met with correct VAT applicability in all the previous tax period, particularly keeping in mind the specified valuation rules which may lead to variation in tax base on which VAT would have been discharged, if any.

How can PKF help?

  • Businesses in the UAE must imbibe the new VAT regulations and establish for themselves a tailor- made VAT-oriented business PKF UAE brings world-class capabilities and high-quality service to clients helping them to align their working model to government reporting and compliance requirements.
  • Our role as tax advisers include:
    • Analyzing the impact of VAT on your business – A complete analysis of the VAT effect on your business helps us provide tailor-made solutions for the financial, operational, and legal aspects of your business.
    • Advising on managing the VAT transaction process – Our expert advice will help your business manage VAT transactions effectively without any room for
    • Invoicing under VAT – We help you to create and manage invoices in accordance with the VAT
    • Advising on VAT related compliances as required by UAE VAT Law –
      • Assistance in compiling of information regarding VAT
      • Assistance in preparing and filing VAT
      • Assistance in communication with the Federal Tax Authority (FTA) for tax related queries and processes (such as refund application, voluntary disclosures) and during tax audits conducted by the
      • Any other VAT related queries and
  • With more than four decades of experience, PKF UAE ensures full guidance on how businesses can duly comply with While the ultimate responsibility and accountability to comply with the law are with the business, PKF UAE can advise at every stage of your business operations. PKF UAE works with an agenda that not only helps your business meet the required VAT standards but also provides inclusive solutions to run the business effectively.


You may email us or can contact any of our team members relating to your queries on this subject:

Stany Pereira Shailesh Kumar Mradul Gupta Megha Lohia Chitransh Kanungo Soumya Tiwari
Managing Partner Director – Tax Services Senior Manager Assistant Manager Assistant Manager Tax Senior



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