Manpower supply companies and recruitment agencies in the UAE must register for Corporate Tax and file a return each year. Taxable income is taxed at 0% up to AED 375,000 and 9% above. Visa and insurance costs recharged to clients must appear with their matching costs, and gratuity on supplied workers is your liability. December 2025 year end returns are due 30 September 2026.
- You supply workers to clients on monthly or hourly billing through a UAE company
- You earn placement fees for recruiting candidates into client roles
- Supplied workers are on your company’s visa, so you pay their visas, insurance and gratuity
- Clients regularly pay you 60 to 120 days after invoice
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Do manpower supply and recruitment companies need to file Corporate Tax?
Yes. A manpower supply company or recruitment agency licensed in the UAE must register for Corporate Tax and file a return every year, mainland or free zone, whatever its profit. High billing and low margins are typical in labour supply, and the return is still due even when the tax works out at zero.
The table below maps the usual business models to the rules as of September 2026.
| Business model | Corporate Tax position | Industry watch point |
|---|---|---|
| Mainland labour supply company | Register and file. 0% up to AED 375,000 of taxable income, 9% above | Gross billing, worker costs and recharges all on the books |
| Recruitment agency earning placement fees | Register and file on the same basis | Fees refundable if a candidate leaves early |
| Free zone recruitment firm placing staff with mainland clients | Register and file. 0% only on qualifying income under full QFZP compliance | Mainland client income is generally non-qualifying |
| Individual recruiter trading personally | Corporate Tax once business turnover exceeds AED 1M in a calendar year | Register by 31 March of the following year |
| Revenue of AED 3M or less | Small Business Relief can be elected for periods ending on or before 31 December 2029 | Still register, file and keep records |
| VAT | Mandatory above AED 375,000 of taxable supplies, voluntary from AED 187,500 | Recharges usually form part of the VAT picture too |
The VAT side of recharges and disbursements is explained in our VAT guide for manpower and recruitment agencies. If you are closing a small recruitment company, read our Corporate Tax deregistration guide before the licence lapses.
Placement fees or manpower supply: how is agency revenue recognised?
A placement fee is usually earned when the candidate joins the client, while manpower supply revenue is earned day by day as your workers do the job. The two models sit in very different places in the accounts, and many agencies run both from the same company.
Placement fees and replacement periods
A recruitment fee of, say, 15% of a hire’s first-year salary is typically earned on the joining date. If your terms promise a free replacement or a partial refund when the hire leaves within 90 days, placements still inside that window at year end may need a refund provision based on your actual drop-out experience. Keep the offer letter, joining confirmation and client acceptance for each placement.
Manpower supply billed on timesheets
When workers are employed on your visa and billed out to clients, you act as principal: the full monthly billing is revenue, and wages, housing, transport and visa costs are your cost of sales. Timesheets for the last weeks of December approved in January still create December revenue, so accrue them.
The revenue model is explained further in our guide to accounting for labour-intensive businesses.
| Income | When it is revenue | Evidence |
|---|---|---|
| Placement fee for permanent hire | On the candidate’s joining date, less expected refunds | Offer letter, joining confirmation, fee invoice |
| Monthly manpower supply billing | In the month the work is done | Approved timesheets, client sign-off |
| Overtime billed to the client | In the month the overtime is worked | Overtime sheets |
| Mobilisation or visa processing fee charged to a client | When the service is completed | Client agreement, visa issue date |
| Replacement or refund under the contract | Reduces placement revenue | Client notice and credit note |
How should visa, insurance and medical costs recharged to clients be recorded?
Record the cost you pay and the amount you recharge on both sides of the accounts, so the recharge never appears as revenue without its matching cost. For workers on your own visa the government fees, medical tests and insurance are your costs as employer; the recharge to the client is part of your income from the contract.
| Cost | Who incurs it | Accounting entry | Common error |
|---|---|---|---|
| Work permit and residence visa fees | Agency as sponsor | Cost of sales per worker | Recharge booked as revenue, fee paid from a personal card and never recorded |
| Medical test and Emirates ID | Agency | Cost of sales | Receipts lost, so the cost cannot be supported |
| Health insurance policies | Agency | Expense over the policy period | Full annual premium expensed in one month |
| Air tickets and joining travel | Agency, often recharged | Cost, with recharge invoiced to the client | Recharge netted against the cost with no invoice |
| Costs paid on behalf of a client for its own employees | Client | Disbursement, cleared when reimbursed | Treated as agency revenue and expense |
A per-worker cost card, showing visa, insurance, medical and travel costs against what the client was billed, makes each contract’s margin visible and gives you the evidence the FTA would ask for. Our work permit and employment visa guide lists the fees employers carry.
What about gratuity on supplied workers and clients who never pay?
Gratuity for workers on your visa is your liability, not the client’s, and unpaid invoices stay income until you have good grounds to write them off. Both items hit manpower companies harder than most because of headcount and long payment terms.
Gratuity liabilities on a supplied workforce
Each supplied worker earns end-of-service gratuity of 21 days of basic wage for each of the first 5 years of service and 30 days for each later year, capped at 2 years’ wage. A worker placed with the same client for 4 years has built up 84 days of basic wage that you will pay when the contract ends, even if the client contract was priced without it.
Your accounts should carry a gratuity provision built from each worker’s join date and basic salary. The timing of the tax deduction for that provision is a point to confirm with your accountant, but leaving the liability out entirely misstates both profit and the balance sheet. See our gratuity calculation guide.
Receivables risk and bad debts
- Invoices you raised are revenue when the work was done, even if the client has not paid
- Chase and document overdue balances with statements, reminders and legal notices
- Write off a debt only with evidence that recovery is unlikely, such as a client in liquidation
- A written-off amount later recovered goes back into income in the year it is received
- Confirm how any expected credit loss provision is treated for tax before you file
Our receivables management guide shows an ageing report that supports these decisions.
Filing the Corporate Tax return for a manpower company: step by step
The return is filed on EmaraTax after the year end accounts are closed. For a manpower or recruitment business, the order of work matters because payroll, billing and gratuity all feed each other.
Reconcile billing to timesheets
Match every client invoice to approved timesheets, accrue December hours approved in January, and confirm placement fees against joining dates.
Match worker costs to payroll and WPS
Tie wages, overtime and allowances for supplied workers to WPS salary files and bank debits.
Build the per-worker cost card
Record visa, insurance, medical and travel costs per worker, and check each recharge invoice has its matching cost.
Update gratuity and refund provisions
Recalculate gratuity for every worker on your visa, and provide for placement refunds still inside replacement periods.
Review receivables
Age client balances, document recovery steps, and write off only debts with clear evidence.
Adjust profit and choose the relief
Add back non-deductible items, disclose payments to owners and connected companies, and compare Small Business Relief with the standard calculation.
File and pay on EmaraTax
Submit the return and pay any tax by 30 September 2026 for a 31 December 2025 year end.
Our Corporate Tax return filing guide covers the EmaraTax portal itself.
Records a recruitment or manpower agency needs for Corporate Tax
You need a worker-level and client-level trail that explains revenue, costs and liabilities, kept for 7 years. The FTA can charge AED 10,000 where records are not kept.
- Trade licence, MOHRE agency approvals where relevant, and Corporate Tax registration certificate
- Client manpower supply agreements and recruitment terms, including replacement periods
- Approved timesheets and client sign-offs by month
- Placement files: offer letters, joining confirmations, fee invoices
- Payroll registers, WPS salary files and bank debit advices
- Visa, work permit, medical, Emirates ID and insurance receipts per worker
- Gratuity provision schedule with join dates and basic wages
- Receivables ageing, collection correspondence and write-off approvals
- Payments to shareholders, directors and connected companies
- Bank statements for every account
Corporate Tax and payroll dates for manpower companies
The Corporate Tax return and payment fall due 9 months after the financial year end, alongside monthly payroll and VAT dates that a labour supply business cannot miss.
| When | What is due | Applies to |
|---|---|---|
| 1st of each month | Previous month’s wages under WPS (Ministerial Resolution 340 of 2026) | All workers on your visa |
| 28th of the month after each VAT period | VAT 201 return and payment, nil returns included | VAT-registered agencies |
| 30 September 2026 | Corporate Tax return and payment for December 2025 year ends | Most manpower and recruitment companies |
| 31 December 2026 | Corporate Tax return for 31 March 2026 year ends | Agencies on a March year end |
| 31 March 2027 | Registration for individuals whose 2026 business turnover exceeded AED 1M | Independent recruiters |
| 31 March 2027 | Appoint an e-invoicing Accredited Service Provider (revenue under AED 50M) | Agencies invoicing corporate clients |
Corporate Tax penalties manpower agencies face in 2026
Under Cabinet Decision 75/2023 as amended, a manpower agency pays AED 10,000 for registering late, AED 500 a month for a late return in the first year and AED 1,000 a month after, and 14% a year on tax paid late.
| Penalty type | Amount | How agencies usually trigger it |
|---|---|---|
| Late registration | AED 10,000, waived if the first return is filed within 7 months of the end of the first tax period | Agency trading for years that thought low margins meant no tax |
| Late return | AED 500 a month for 12 months, then AED 1,000 a month | Timesheet and gratuity reconciliations unfinished |
| Late payment | 14% a year, calculated monthly | Tax cash stuck in overdue client receivables |
| Incorrect return | AED 500 or more, plus 1% a month on the tax difference | Visa recharges booked as revenue with no matching cost, or unaccrued timesheets |
| Records not kept | AED 10,000, AED 20,000 for a repeat within 24 months | No per-worker cost or visa records |
| Late deregistration | AED 1,000 a month, up to AED 10,000 | Agency licence cancelled without deregistering |
Consider an agency with AED 58,500 of Corporate Tax that files and pays 13 months late. The filing penalty is 12 x AED 500 plus 1 x AED 1,000, which is AED 7,000. Late payment at 14% a year is AED 682.50 a month, or AED 8,872.50 over 13 months. The total, AED 15,872.50, is more than a quarter of the tax itself. Our Corporate Tax penalties guide sets out the rest.
Could penalties already be running on your agency?
We check your filings, recharges and gratuity records on a free 15-minute call and tell you where you stand.
6 Corporate Tax pitfalls for manpower and recruitment agencies
The pitfalls in labour supply are about liabilities that build quietly and income that is recorded on the wrong side. Each of these ends in an incorrect return or a records penalty.
- Booking recharged visa costs as revenue with no matching cost. Revenue rises while the cost sits in a personal card statement or is never recorded, so profit and tax are overstated or the figures cannot be supported.
- Leaving gratuity liabilities unrecorded. Years of earned gratuity on supplied workers are missing from the accounts, which overstates profit and hides a real cash obligation.
- Not accruing approved timesheets at year end. December’s hours billed in January fall into the wrong year and understate revenue.
- Writing off slow payers without evidence. A client 150 days late is not a bad debt by default, and an unsupported write-off understates income.
- Ignoring placement refunds. Fees subject to replacement periods are treated as final, then reversed the next year with no provision.
- Paying connected companies above market rates. Subcontracting workers from a related company without arm’s length pricing breaks transfer pricing rules and must be disclosed.
How manpower companies can prevent Corporate Tax penalties
Use the monthly payroll and billing cycle as your tax routine, and add a quarterly review of liabilities. This checklist suits agencies of any size.
- Monthly: reconcile client billing to approved timesheets and accrue late approvals
- Monthly: reconcile payroll to WPS files and pay wages by the 1st of the following month
- Monthly: update the per-worker cost card for visas, insurance and recharges
- Quarterly: recalculate gratuity for joiners, leavers and salary changes
- Quarterly: review the receivables ageing and document collection efforts
- Quarterly: set aside cash for Corporate Tax on profit to date
- Annually: decide Small Business Relief, the 0% band or QFZP before preparing the return
- Annually: have a qualified accountant review recharges, gratuity and write-offs before filing
Agency late on its Corporate Tax return or holding an FTA penalty?
File the outstanding return first, because the monthly filing penalty keeps accruing and doubles after 12 months. Our action plan for a missed Corporate Tax deadline covers the first week.
Next, pay the tax shown to stop 14% a year late payment penalties growing. If a return already submitted counted recharges as revenue without matching costs, or ignored gratuity, fix it through a voluntary disclosure on EmaraTax.
If you want to challenge a penalty, request reconsideration within 40 business days of the FTA decision, with evidence. A refused request can then go to the Tax Disputes Resolution Committee. Our guide to FTA penalty reconsideration explains what to write.
Received an FTA notice or filed after the deadline?
Send us the notice and we will set out what to file first and whether a reconsideration request is worth making.
Worked example: an illustrative Dubai manpower supply company
Take an illustrative Dubai manpower supply and recruitment company with AED 2.1M of supply billing, which includes AED 240,000 of visa and insurance recharges matched by AED 240,000 of costs, plus AED 300,000 of placement fees. Revenue is AED 2.4M and accounting profit after wages, gratuity provision and recharged costs is AED 520,000.
| Component | Elect Small Business Relief | Standard calculation |
|---|---|---|
| Manpower supply billing (including recharges) | AED 2,100,000 | AED 2,100,000 |
| Placement fees | AED 300,000 | AED 300,000 |
| Total revenue | AED 2,400,000 | AED 2,400,000 |
| Accounting profit | AED 520,000 | AED 520,000 |
| Amount taxed at 9% | None, taxable income treated as nil | AED 145,000 |
| Corporate Tax | AED 0 | AED 13,050 |
| Four months late filing | 4 x AED 500 = AED 2,000 | AED 2,000 plus late payment penalty |
Now suppose the AED 240,000 of recharges had been booked as revenue while the visa and insurance costs were paid from an owner’s card and never recorded. Profit would jump to AED 760,000 and standard tax to 9% x AED 385,000 = AED 34,650, based on figures the company could not support. Our guide to Small Business Relief explains the election.
Should a manpower agency file in-house, through a freelancer or with a firm?
With workers on your visa, gratuity and recharges on every contract, most manpower agencies need someone who reconciles payroll and billing monthly. The comparison below avoids market prices because they vary widely.
| What matters | In-house | Freelance accountant | Accounting firm such as Paci |
|---|---|---|---|
| Cost | Admin staff time | Often lower fees, depends on the person | Fixed quote within 24 hours, no hourly billing |
| Recharge and cost matching | Easily missed | Varies | Checked per worker |
| Gratuity for supplied workers | Rarely calculated | Depends on experience | Calculated and reviewed |
| Receivables and write-offs | Informal | Some review | Documented before filing |
| Right for | Very small recruitment desk | Agency with a few contracts | Agencies supplying dozens or hundreds of workers |
Paci’s Corporate Tax filing service prepares the return for a fixed quote, and bookkeeping starts from AED 599 a month to keep payroll, recharges and gratuity current.
What manpower and recruitment agency owners actually ask us
A client in India wants a UAE Tax Residency Certificate before paying us. We have operated since 2017 with a TRN and Corporate Tax registration but have never been audited. Do we need audited financials?
For Corporate Tax itself, audited financial statements are required under Ministerial Decision 84 of 2025 only where revenue exceeds AED 50M or the company is a Qualifying Free Zone Person. A Tax Residency Certificate is a separate FTA application with its own document list, so check the current requirements before applying. Our Tax Residency Certificate service can prepare the file.
I opened an IFZA recruitment company last November and want to close it. The agent registered me with the FTA even though I have made almost no sales. What does cancelling involve?
On the Corporate Tax side, apply to deregister on time and file the final return, because late deregistration costs AED 1,000 a month up to AED 10,000. If you are VAT-registered, keep filing every VAT return until the registration is cancelled, since nil returns count and a late one costs AED 1,000. Our guides to cancelling a TRN and IFZA compliance cover each step.
A consultant told someone we know that VAT registration was urgent, and they later faced thousands in penalties. When is VAT registration really required?
VAT registration becomes mandatory only once taxable supplies and imports exceed AED 375,000 in the past 12 months, or are expected to within the next 30 days, and is voluntary from AED 187,500. Once registered, a VAT 201 return is due by the 28th after every period, nil returns included, and each late return costs AED 1,000, or AED 2,000 for a repeat within 24 months. Our late VAT registration guide covers the other side of the risk.
Before filing, what should we check about transactions with shareholders and our sister companies, and what if we file on time but pay late?
Check that every payment to shareholders, directors, their relatives and connected companies, such as a sister company that supplies you workers, is at arm’s length and listed for the disclosure filed with the return. A return with no tax due still has to be filed within 9 months of year end. Filing on time but paying late still costs 14% a year, calculated monthly. Our transfer pricing guide explains arm’s length pricing.
What catches agencies out with Corporate Tax beyond the 9% rate, such as registering on time and paying late?
Registering and filing are separate duties with separate penalties. Registering late costs a flat AED 10,000, removed only if the first return is filed within 7 months of the first tax period end, while the return is due 9 months after year end. Paying after that date adds 14% a year, calculated monthly. Check your own registration date against the timeline the FTA set for your licence.
Frequently asked questions
Do manpower supply companies pay Corporate Tax on gross billing?+
No. Corporate Tax is charged on taxable income, which starts from profit after wages, visas, insurance, housing and other costs of supplying workers. Gross billing is revenue, but only taxable income above AED 375,000 is taxed at 9%. Revenue still matters because it decides whether the company can elect Small Business Relief.
When are recruitment placement fees taxable?+
A placement fee is normally income when the candidate joins the client, because that is when the agency has done what it was paid for. If your terms offer a refund or free replacement within a set period, provide for expected refunds on placements still inside that period at year end.
Who is responsible for gratuity on outsourced workers, the agency or the client?+
Where supplied workers are employed on the agency’s visa, the agency is their employer and owes their end-of-service gratuity. That liability belongs in the agency’s accounts as a provision, calculated at 21 days of basic wage per year for the first 5 years and 30 days per year after that, capped at 2 years’ wage.
Can a recruitment agency elect Small Business Relief?+
Yes, if it is a resident company whose revenue is AED 3M or less in the tax period and every earlier period, and it is not a Qualifying Free Zone Person. The relief now applies to tax periods ending on or before 31 December 2029 under Ministerial Decision 131 of August 2026. Growing manpower companies often cross AED 3M quickly, so check each year.
Can a manpower company in a free zone pay 0% Corporate Tax?+
Only on qualifying income, and only if it meets all Qualifying Free Zone Person conditions, including adequate substance, audited financial statements and transfer pricing compliance. Supplying workers to mainland clients generally produces non-qualifying income, and exceeding the lower of AED 5M or 5% of revenue removes the 0% rate for that period and the next four. Our QFZP guide explains the tests.
Does a labour supply company need to file Corporate Tax if its margin is very low?+
Yes. Filing is required regardless of margin or profit, and even a company with zero taxable income files by the deadline, 30 September 2026 for a December 2025 year end. A late return costs AED 500 a month for the first 12 months, so a thin-margin agency can easily pay more in penalties than in tax.
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- FTA: Waiver of Penalties
- FTA: Small Business Relief Guide (CTGSBR1)
- Ministry of Finance: Small Business Relief decision
- FTA: Registration for VAT
- u.ae: Payment of wages
Checked against these sources on 15 September 2026. This guide is general information for UAE businesses, not advice on your specific facts.