Issue
In some instances, employment visas are held by one person (e.g. company) while the employees work under the supervision and control of another person.
Supervision and control of employees refer to an employer being responsible for deciding on the place of work of the employee, assigning employees their work tasks, and evaluating/assessing their performance.
These supplies can either be classified as manpower services (identifying/recruiting/hiring candidates and making such employees available to work for another entity) or visa facilitation services (administrative services to merely facilitate the employment visa process for employees hired by another entity without making its employees available to that other entity).
Companies are facing challenges in determining the nature of the supply (i.e. whether it is a supply of manpower or visa facilitation services), and how to determine the value of these supplies for VAT purposes, especially where they are part of the same corporate group.
This Public Clarification provides guidelines on determining the nature of these supplies as well as the application of the relevant valuation rules.
Summary
The identification/recruitment/hire 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.
Detailed analysis
In some instances, employment visas are held by one person (e.g. a company) while the employees work under the supervision and control of another entity.
Since the VAT treatment differs, companies are required to differentiate between manpower services and visa facilitation services.
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 services under the VAT legislation.
In these instances, the Supplier is, generally, responsible for all the employment obligations, including the payment of salaries and other benefits.