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Globalpedia

Payroll in AeUnited Arab Emirates.

Population

9,282,410

Languages

1.

Arabic

Country Capital

Abu Dhabi

Currency

UAE dirham (AED)

The United Arab Emirates (UAE) is a federation composed of 7 regions. Most companies look to incorporate in Abu Dhabi, Dubai, or one of the country’s approximately 45 free trade zones. Although the incorporation process might seem simple, many businesses find it labor-intensive to meet the UAE’s requirements and regulations on payroll and other matters of compliance.

Instead of getting caught up in this confusing process, G-P can help ensure that your UAE-based teams are paid in accordance with local compliance requirements. We manage compliance, so customers can focus on their company.

Taxation rules in the UAE

The UAE does not mandate any employer taxes, which is one of the reasons it is such an attractive place for business growth. It does not have a corporate income tax, except for specific industries such as branches of international banks and companies in the oil and gas industries.

As of January 2023, UAE requires both domestic and international employees to subscribe to the Involuntary Loss of Employment Scheme. Employees who started employment on or after January 1, 2023, must sign up within 4 months of starting employment. The insurance premiums vary depending on the employee’s salary.

United Arab Emirates payroll options for companies

Just as companies have multiple business structure options for incorporation, they also have various payroll options:

  • Internal: Larger subsidiaries may run their own payroll in the UAE. This option is the most expensive since companies would have to hire a full HR team.
  • A United Arab Emirates payroll processing company: If outsourcing is a better option, companies can work with a local UAE payroll processing company. However, they will still be held liable for all of their work and any compliance mistakes.
  • An Employer of Record (EOR) partner: An EOR like G-P handles the complexities of setting up and managing payroll in the UAE, mitigating compliance risk, so companies can reserve their time and resources for growing their global teams.

How to establish payroll in the UAE

If a company opts to establish United Arab Emirates payroll alone, they will need to establish a subsidiary first. The process differs based on the type of entity the company chooses, but it is legally required to complete the subsidiary’s setup before running payroll. The company will also need an in-country bank account if they are required to pay employees registered under the Wage Protection System (WPS).

Entitlement and termination terms

When terminating an employee in the UAE, the company will typically owe some type of severance pay. Employees who have worked for the company for a year or more receive severance depending on the length of their service.

  • Employees who have worked less than 1 year do not receive severance pay.
  • Employees who have worked between 1 and 5 years receive 21 days of base salary for each year worked.
  • Employees who have worked more than 5 years receive 21 days of base salary for each of the first 5 years and 30 days for the remaining years.

Streamline global payroll management with G-P.

G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.

Contact us to learn more about how we can support you.

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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