Labour camps and labour accommodation are generally areas where labourers are housed by their employers. They can take many different forms and some may provide residents with additional services on top of the living accommodation. It is therefore necessary to consider on a case by case basis whether labour accommodation is:

• a residential building, and therefore exempt from VAT (or zero-rated if the first supply); or
• serviced accommodation, and therefore standard rated

Summary There will be instances where the supply of certain labour accommodation shall be a supply of residential property, and other instances where the supply of certain labour accommodation shall be a supply of serviced accommodation. The distinction is important as it will affect the VAT liability of the supply. Suppliers are required to consider the extent of the additional services supplied along with the accommodation in order to determine the nature of the supply. Suppliers should also consider whether they are making a 2 single composite supply, or whether they are making a mixed supply of several different component parts. Discussion Detailed Labour accommodation as residential property Llabour accommodation will be considered to comprise of lodgings which are to be treated as residential buildings where:

• the building or lodging is occupied by the employees as their principal place of residence;
• it is a building which is fixed to the ground and which cannot be moved without being damaged

the building has been constructed or converted with lawful authority; and

• it is not a building which is similar to a hotel, motel, bed & breakfast establishment, or serviced apartment for which services in addition to the supply of accommodation are provided

Labour accommodation as services accommodation In certain cases, residents may be provided with additional services on top of the living accommodation. In such cases, it is necessary to consider whether the extent of the additional services provided would move the supply from one of residential accommodation to serviced accommodation. Each scenario must be assessed on its actual facts. Services normally supplied along with residential accommodation It is normal that a supplier of residential accommodation may provide certain services as ancillary to the main supply. Where those additional services are incidental to the main supply of accommodation and not provided for an additional fee, they should not normally cause the supply to become one of serviced accommodation. Such incidental services may include, but are not limited to, the following:

• cleaning of communal areas;
• maintenance services required for the general
• garbage collection;
• security;
• utilities e.g. electricity, water, etc;:

. · access to facilities within the building for residents to use themselves, e.g. launderette facilities, gym, pool, prayer rooms etc : Additional services indicating a supply of serviced accommodation The additional services which may indicate that the supply is one of serviced accommodation, rather than residential accommodation, includes but is not limited to the following:

• telephone and internet access;
• cleaning of the rooms, other than purely the
• communal areas of the property;
• laundry services, including the regular changing of bed linen;
• catering
• maintenance services other than those required for the general upkeep of the property.

Mixed versus composite supplies Suppliers of labour accommodation should also consider whether they are making a single composite supply (of either residential accommodation, or serviced accommodation based on the above), or whether they are making a mixed supply with separate component parts. Where a single composite supply is made, the entire consideration for the supply shall be subject to the VAT treatment of the principal component. Where a mixed supply is made, each component part must be valued and the correct VAT treatment applied to each component part. In accordance with Article 4 of the Cabinet Decision No. 52 of 2017 on the Executive Regulations of the Federal Decree-Law No. 8 of 2017 on Value Added Tax, a single composite supply shall exist in the following