United Arab Emirates Payroll Guide
HR & Payroll in the United Arab Emirates
National Currency: United Arab Emirates Dirham (AED).
Minimum Wage: There is no uniform national minimum wage. However, certain minimum wages may be applied by sector or in individual contracts, particularly for domestic workers.
Tax Year: 1 January – 31 December. Salary Calculation: gross to net.
Legal Working Hours: 8 hours a day / 48 hours a week. During Ramadan, working hours are reduced by 2 hours a day for all employees, including non-Muslims.
Working Week: Monday-Friday work schedule (with a half day on Fridays)
About the United Arab Emirates
The United Arab Emirates (UAE) is a federation of 7 emirates, the best known of which are Abu Dhabi (capital) and Dubai (economic centre). Since it was founded in 1971, the UAE has grown rapidly thanks to oil revenues, but above all thanks to ambitious diversification into tourism, finance, logistics, tech and real estate.
The UAE is positioning itself as an attractive destination for expatriates and investors, thanks in particular to the absence of income tax, flexible regulations and world-class infrastructure.
The UAE is positioning itself as an attractive destination for expatriates and investors, thanks in particular to the absence of income tax, flexible regulations and world-class infrastructure.
Income Tax in the UAE There is no personal income tax for employees in the UAE. This makes it a popular destination for expatriate professionals and investors. Employers are not required to withhold income tax from salaries.
Social security in the United Arab Emirates
In the UAE, the social security system applies only to qualified employees who are UAE nationals or citizens of other Gulf Cooperation Council (GCC) countries. Non-GCC nationals are not subject to this social security regime. Expatriates do not contribute to a public scheme but generally benefit from compulsory private health insurance paid for by the employer. For UAE national employees, social security contributions are set at 26% of gross salary as specified in local employment contracts. This requirement also applies to employees of companies and branches registered in Free Zones. Below is how the 26% contribution mix is divided between employers and employees:
| Category | Employer | Employee |
|---|---|---|
| Overall Contribution Structure (UAE Citizens Only) 26% | 15%* | 11% |
For Salaries below AED 20,000 per Month: Employer Contribution: Effectively, the employer contributes 12.5% and the government supplements with an additional 2.5% on behalf of the employer. While Employee contributions remains at 11%.
Mandatory Health Insurance in the UAE: In Dubai and Abu Dhabi, private sector employees and their dependents already benefit from mandatory health insurance, as regulated by the Dubai Health Authority (DHA) and the Department of Health – Abu Dhabi (DoH). Starting January 1, 2025, new regulations will extend this mandate to all Emirates—including Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain—requiring employers to provide basic health insurance upon the issuance or renewal of residency permits
Collection
The employer has the responsibility of both withholding and remitting their employees’ social security contributions, which are required payments to the General Pensions and Social Security Authority. (GPSSA) (Maashi). The General Pension and Social Security Authority (GPSSA) is the primary federal body for managing social security for UAE nationals and eligible GCC citizens. However, there is an additional authority for the Emirate of Abu Dhabi. Specifically:
Abu Dhabi Retirement Pension and Benefits Fund (ADRPBF): This authority is responsible for managing social security contributions. It collects contributions from employees, employers, and the government, and manages the resulting assets through investment strategies to ensure pensions and benefits are delivered to eligible individuals.
Our HR & Payroll Experts are Ready to Help
Payroll and HR are different in each country and to each business. Trust one of our local experts to ensure your company’s compliance in the United Arab Emirates.
Our Payroll and HR services in the UAE
- Implementation and testing of the software
- An understanding of your individual business payroll processes
- Online payslips & payments
- A dedicated payroll expert
- Data entry & processing
- Payslip distribution
- Personnel & document production
- Legislation compliance
- Highly secure
Sources
- https://www.pension.gov.ae/en-us/Pages/AboutUs.aspx
- https://www.mohre.gov.ae/en/media-center/awareness-and-guidance/health-insurance-scheme.aspx#:~:text=As%20part%20of%20the%20Cabinet,renewal%20of%20their%20residency%20permits.
- https://u.ae/en/information-and-services/jobs/employment-in-the-private-sector/types-of-leaves-and-entitlements-in-the-private-sector/annual-leave
- https://gulfnews.com/living-in-uae/health/uaes-mandatory-health-insurance-for-workers-starts-today-everything-you-need-to-know-1.500009608
- https://www.dha.gov.ae/en
- Banque centrale des EAU
- Ministry of Human Resources and Emiratisation – MOHRE
- The United Arab Emirates Government portal
- Federal Tax Authority – UAE
- World Bank – UAE
- KPMG UAE – Taxation Guide
- PwC UAE – Doing Business in the UAE 2023
- GPSSA – General Pension and Social Security Authority