We can see in the United Arab Emirates many labor camps, which are the places where the employers accommodate their labor. Moreover, many of the employers offer extra services with the accommodation, which makes the residence become a serviced property, which leads to different VAT treatments. Therefore, it is important to analyze on a case by case basis whether the labor camp is a:
To be able to understand the correct VAT treatment that shall apply on an accommodation supply, taxable persons shall first understand the nature of the accommodation that the labors are kept in. Where the accommodation is a residential property, the first supply will be treated as zero-rated supply, and the subsequent supplies will be treated as VAT exempt supplies.
As mentioned earlier in this article, the VAT treatment on the first supply of a residential accommodation is zero-rated, and VAT exempted in the subsequent supplies. Generally, residential buildings still come with services that are always necessary for the building and its residents, and does not make a residential property turn into a serviced property, for example,
Serviced accommodation are residential buildings where extra services are being provided, making the whole accommodation supply taxable. The following are the services that, if provided, make the labor accommodation a serviced property rather than a residential accommodation,
Fame Legacy DMCC
Tax Assistant Manager – Tax Agent, TAAN: 20040382