Is VAT charged on salaries recharged to a related company?

Answered by TI from the Federal Tax Authority’s own law · 15 September 2026. Guidance, not tax advice: rely on the official text.

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Yes, if you supply manpower services, the recharged salaries are part of the taxable amount. You charge 5% VAT on the full amount the customer pays, including those salaries.

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The detail

Yes. Under the FTA's guidance on manpower vs visa facilitation services, the value of a supply of manpower services includes the full amount recharged to the customer, comprising salaries, benefits, and any other recharges. Therefore, VAT at 5% is chargeable on the full invoice amount, regardless of who actually pays the employees' salaries. This is the FTA's published clarification (guidance, not legislation), so it reflects the FTA's administrative position on how the VAT law applies to manpower services.1

What the law says

The FTA's Public Clarification on Manpower vs Visa Facilitation Services provides that the consideration for a supply of manpower services includes the full amount received (or expected to be received) from the customer, whether that amount is recharged to the customer or paid directly to the employees as salaries or wages.1 Based on FTA guidance
The clarification further states that the consideration equals the total amount incurred by the customer, including salaries and benefits (regardless of who pays them), as well as any additional amounts related to the supply of the services.1 Based on FTA guidance

What it depends on

This applies when the arrangement constitutes a supply of manpower services - i.e., you make employees available to work for the customer under the customer's direction - rather than merely providing visa facilitation or sponsorship services.1 Based on FTA guidance
If the recharge is purely a cost pass-through in a context that does not amount to a taxable supply of manpower services (for example, a loan or expense reimbursement unrelated to making staff available), the treatment would differ, but the FTA guidance specifically addresses manpower recharges.1 Based on FTA guidance

Check before you rely on it

Check that your agreement and activity amounts to supplying manpower services (making employees available to the related company to work) and not just visa sponsorship.
Check that your invoice to the related company includes the full recharged salaries, benefits, and any other recharges as the taxable value subject to 5% VAT.

Note: The provided sources do not address recharges of salaries in arrangements that are not manpower services (e.g., pure expense reimbursement or loans).

Sources (1) — read the official text

1Manpower vs Visa Facilitation ServicesFTA guidance

Read the article
قيمة التوريد – خدمات توفير قوى عاملة Value of supply - manpower services The consideration for the supply of manpower يشمل مقابل توريد خدمة توفير قوى عاملة المبلغ الكامل includes the full amount received (or expected to ،الذي يستلمه المورد (أو الذي يتوقع أن يستلمه) من العميل be received) by the Supplier from the Customer والذي يتم إما فرضه على العميل أو دفعه مباشرة للموظفين that is either recharged to the Customer, or .مثل الرواتب أو األجور directly paid to the employees such as salaries or wages. Therefore, for VAT purposes, the consideration will سيشمل المقابل ألغراض ضريبة القيمة المضافة،لذلك include the employees' salaries, benefits and any ،رواتب الموظفين والمزايا وأية مبالغ مفروضة إضافية additional amounts charged as well as other تتعلق بخدمات توفير،وكذلك أي استرداد لتكاليف متكبدة recharges, that relate to the provision of the .قوى عاملة manpower services. مثال على خدمات توفير قوى عاملة Example - Manpower Services Company A holds the employment visas for تتم كفالة الموظفين العاملين لدى الشركة (ب) من قبل employees working at Company B. Company A تقوم الشركة (أ) بإتاحة هؤالء الموظفين للعمل.)الشركة (أ makes these employees available to Company B, وبالتالي يُنظر إلى الشركة (أ) على أنها،)لدى الشركة (ب and, hence, Company A is regarded as supplying تقوم بتوريد خدمات توفير قوى عاملة بغض النظر عما إذا manpower services irrespective of whether the )كانت رواتب الموظفين ومزاياهم تدفع من قبل الشركة (أ employees’ salaries and benefits are paid by .)أو الشركة (ب Company A or Company B. The consideration for the supply of manpower يكون مقابل توريد خدمات توفير القوى العاملة مساويا ا للمبلغ services is equal to the total amount incurred by بما في ذلك الرواتب،)اإلجمالي الذي تتكبده الشركة (ب Company B, including salaries and benefits والمزايا (بغض النظر عما إذا كانت رواتب ومزايا الموظفين (irrespective of whether the employees’ salaries وكذلك أي مبالغ،))تدفع من قبل الشركة (أ) أو الشركة (ب and benefits are paid by Company A or Company )تتعلق بالخدمات التي تقدمها الشركة (أ) إلى الشركة (ب B), as well as any amounts related to the services provided by Company A to Company B in relation to the supply of the services. 4/14 .فيما يتعلق بتوريد الخدمات

Official PDF, p. 4Captured from the FTA website on 9 Sep 2026

Helpful?

Yes, if you supply manpower services, the recharged salaries are part of the taxable amount. You charge 5% VAT on the full amount the customer pays, including those salaries.

This is the FTA's published clarification (guidance, not legislation), so it reflects the FTA's administrative position on how the VAT law applies to manpower services. [1]

What the law says:
- The FTA's Public Clarification on Manpower vs Visa Facilitation Services provides that the consideration for a supply of manpower services includes the full amount received (or expected to be received) from the customer, whether that amount is recharged to the customer or paid directly to the employees as salaries or wages. [1]
- The clarification further states that the consideration equals the total amount incurred by the customer, including salaries and benefits (regardless of who pays them), as well as any additional amounts related to the supply of the services. [1]

What it depends on:
- This applies when the arrangement constitutes a supply of manpower services - i.e., you make employees available to work for the customer under the customer's direction - rather than merely providing visa facilitation or sponsorship services. [1]
- If the recharge is purely a cost pass-through in a context that does not amount to a taxable supply of manpower services (for example, a loan or expense reimbursement unrelated to making staff available), the treatment would differ, but the FTA guidance specifically addresses manpower recharges. [1]

Check before you rely on it:
- Check that your agreement and activity amounts to supplying manpower services (making employees available to the related company to work) and not just visa sponsorship.
- Check that your invoice to the related company includes the full recharged salaries, benefits, and any other recharges as the taxable value subject to 5% VAT.

Note: The provided sources do not address recharges of salaries in arrangements that are not manpower services (e.g., pure expense reimbursement or loans).

Sources:
1. Manpower vs Visa Facilitation Services — p. 4

Written by AI from the FTA sources above and checked before display. Not tax advice or official FTA information - confirm with a tax adviser before you act. Full disclaimer

Is VAT charged on salaries recharged to a related company?

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What the law says

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