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FTA classifies labour accommodation for VAT payment

The Federal Tax Authority said on Tuesday that it classified labour accommodation into two categories for tax payment purposes taking into consideration whether the facility provides additional services making it subject to the standard 5 per cent Value Added Tax or a purely residential building and therefore exempt from VAT.

The Authority underlined the importance of accurately determining the type of labour accommodation as it would affect the VAT incurred by the supplier.

FTA went on to explain that “labour accommodation” refers to areas utilised by employers to house their staff, some of which offer additional services. The FTA also outlined four cases where these facilities are treated as residential buildings exempt from VAT. Details are provided on the website of FTA.

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