UAE payroll: no income tax on salaries. GOSI: 5% employee + 12.5% employer on UAE national salaries (Abu Dhabi: GPSSA at similar rates). Gratuity: 21 calendar days per year for first 5 years; 30 days per year thereafter (based on last basic salary). WPS: pay within 15 days of wage due date; penalty AED 5,000 per employee, AED 50,000 cap.
UAE GOSI calculation (UAE nationals)
| Component | Rate | Example (AED 15,000 basic) |
|---|---|---|
| Employee contribution | 5% of basic salary | AED 750/month |
| Employer contribution | 12.5% of basic salary | AED 1,875/month |
| Total GOSI | 17.5% of basic salary | AED 2,625/month |
| Employee take-home (before deductions) | Gross minus 5% GOSI | AED 15,000 − AED 750 = AED 14,250 |
UAE end-of-service gratuity calculation
- Formula: Gratuity = (Last basic salary ÷ 30) × gratuity days per year × years of service.
- First 5 years: 21 calendar days of basic salary per year. Example: AED 15,000 basic, 3 years service → (15,000 ÷ 30) × 21 × 3 = AED 31,500.
- After 5 years: 30 calendar days of basic salary per year (for the additional years). Example: AED 15,000 basic, 7 years service → (15,000 ÷ 30) × [21 × 5 + 30 × 2] = AED 52,500 + AED 30,000 = AED 82,500. Wait — recalculate: (500 × 21 × 5) + (500 × 30 × 2) = 52,500 + 30,000 = AED 82,500.
- Resignation reduction: Since 2 February 2023, all contracts are limited-term — the old unlimited-contract resignation reduction (1/3 or 2/3 of gratuity) no longer applies to new contracts. Employees on new limited-term contracts are entitled to full gratuity on expiry or resignation.
- Maximum gratuity: UAE Labour Law caps gratuity at 2 years’ total salary. Any calculation that exceeds 24 months of total salary is capped at that amount.
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UAE Wage Protection System (WPS)
- Deadline: Pay salaries within 15 days of the contractual wage due date. If an employee is due salary on the 1st, payment must reach their account by the 15th.
- WPS compliance: Salaries must be transferred via a UAE bank or exchange house to an employee WPS-registered account. Cash payments do not satisfy WPS.
- Penalties: AED 5,000 per employee per month for late or non-WPS salary; AED 50,000 cap per company per month. Repeat violations trigger work permit bans.
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Frequently asked questions
Is there income tax on salaries in UAE?
No — UAE does not impose income tax on salaries or personal income. All employees in UAE keep their full gross salary (after any GOSI deduction for UAE nationals). This applies to UAE nationals and all expatriate employees regardless of nationality. There is no personal income tax, no capital gains tax on personal investments, and no inheritance tax in UAE.
Who pays GOSI in UAE?
GOSI (General Organisation for Social Insurance) applies to UAE nationals employed in the private sector in most emirates. In Abu Dhabi, GPSSA (General Pension and Social Security Authority) applies instead. GOSI does NOT apply to expatriate employees. The employee contributes 5% of basic salary; the employer contributes 12.5% of basic salary. The total 17.5% is remitted monthly to GOSI/GPSSA by the employer.
How is UAE gratuity calculated on resignation?
For contracts entered after 2 February 2023 (all new contracts are limited-term): employees are entitled to full gratuity on any termination including resignation, using the standard formula (21 days per year for first 5 years, 30 days per year thereafter, based on last basic salary). For employees on pre-February 2023 unlimited contracts that have not been converted: the old UAE Labour Law gratuity reduction rules on resignation still apply until the contract is renewed.
What is included in ‘basic salary’ for gratuity calculation?
Gratuity in UAE is calculated on the ‘basic salary’ only — not total package. Allowances (housing allowance, transport allowance, phone, education) are excluded from the gratuity base, even if they are contractually defined. The ‘basic’ salary line in the employment contract is the only figure used. Commissions and bonuses are generally excluded unless the contract specifically states they form part of basic salary.
Official UAE Government Sources
