United Arab Emirates Payroll Information – Deel Global Payroll

Updated on: 2025/08/04 14:35 (UTC)

Overview

The United Arab Emirates (UAE) is a federation of seven semi-autonomous emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain. The primary part of the UAE is on the Arabian Peninsula and is bordered to its south and west by Saudi Arabia; to its east by the main part of Oman; and to its northeast by the primary part of the Musandam Governorate, which is an exclave of Oman. The northeast part of the UAE contains the Madha enclave, which is part of Oman, and within Madha is another part of the UAE, the enclave of Nahwa. The UAE also includes numerous islands, most of which are relatively close to its northern coast. The Persian Gulf borders the UAE to its north and the Gulf of Oman borders the UAE to its east.

The primary spoken and written language used in the UAE is the Emirati dialect of Arabic, itself part of Gulf Arabic (Khaleeji), although Modern Standard Arabic is the primary spoken and written language used in governmental communications of the UAE. The English language is widely used in the UAE. The Hindi, Malayalam, Pashto, Persian (Farsi), Tagalog, and Urdu (Lashkari) languages also are commonly used in the UAE because these are the primary languages used by many of the expatriates in the UAE’s workforce, with foreign workers accounting for 85% of the country’s workforce population.

The UAE’s currency is the United Arab Emirates dirham.

Employers in the UAE have no income tax withholding obligations because the UAE has no nationwide personal income tax, and because no emirate has imposed a personal income tax, even though emirate has its own tax law.

Retirement plan contributions are required for employers of UAE nationals, but not for foreign workers. Dubai and Abu Dhabi employers are required to provide health insurance for all employees. Some of the UAE’s more than 30 free trade zones (FTZs) have social tax requirements that are in addition to the national requirements regarding nationally assessed social taxes. This primer’s Social Taxes section focuses upon social taxes that are nationally assessed.

The UAE’s Labor Law (Federal Law No. 8 of 1980, as amended) applies to all employees in the UAE, with some exceptions. A separate employment law applies to employees who work in the Dubai International Financial Centre (DIFC), which among the UAE’s FTZs is the most prominent FTZ focused upon finance. Some of the UAE’s other FTZs also have an employment law separate from the UAE’s Labor Law. This primer’s Compensation and Benefits section focuses upon the UAE’s Labor Law.

Although foreign workers account for a substantial portion of the UAE’s workforce and generally are covered by the same workplace laws as UAE citizens, there is a preference under UAE law for hiring UAE workers.

UAE citizens working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

CURRENCY DETAILS

The currency of the UAE is the United Arab Emirates dirham (), also known as the UAE dirham, the Arab Emirates dirham, and the Emirati dirham. The internationally recognized three-letter currency code for the UAE dirham is AED, which also is one of the currency’s commonly used currency symbols. The plural form of UAE dirham is UAE dirhams.

While the vast majority of currencies do not have a fixed exchange rate with the U.S. dollar, the UAE dirham has a fixed exchange rate ratio with the U.S. dollar of 3.673 to 1, although slight variations in this ratio sometimes occur.

When an amount of UAE dirhams is written using the currency symbol , the symbol follows the numerical value with a space between the numerical value and symbol. The manifestation of the aforementioned placement treatment in Modern Standard Arabic, which involves a right-to-left writing system, is that the currency symbol appears to the left of the numerical value with a space between the numerical value and symbol. The currency symbol has a variant in which each of the two Arabic letters within the currency symbol has a dot (.) to its left instead of just one dot being present in the symbol, and the placement treatment of this variant is the same as that of the currency symbol .

When an amount of UAE dirhams is written using the currency symbol AED, the symbol precedes or follows the numerical value with a space or no space between the numerical value and symbol. The currency symbol Dh, and its variants Dh., DH, and DH., have the same placement treatment as the currency symbol AED.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a UAE dirham is referred to as a fils, with a plural form that is the same as its singular form and a plural form of fulus, with usage depending on context. Use of the term fils for a currency subdivision equivalent to one hundredth of a whole currency unit is less common than use of the term fils for a currency subdivision equivalent to one thousandth ( ¹ ⁄ _1,000 ) of a whole currency unit, as for example is the case with the fils subdivision of the Kuwaiti dinar, which is equivalent to one thousandth of a Kuwaiti dinar.

When amounts of UAE dirhams are written in Modern Standard Arabic, the numerals are arranged in a left-to-right convention instead of Modern Standard Arabic’s general right-to-left convention, and the comma that in English separates the thousands place from the hundreds place generally is not rendered, with the numbers in the thousands place and hundreds place having no symbol or space between them and instead adjacent to each other. However, with regard to Arabic as used in the UAE, a comma, dot (.), or space, or an Arabic-language symbol () known as the Arabic thousands separator, sometimes is present between the thousands place and hundreds place.

TAXES

Employees who are UAE nationals are subject to compulsory withholding for pension contributions with a higher employer contribution included, covered under social taxes.

The fiscal year in the UAE is the calendar year, Jan. 1 to Dec. 31.

Income Taxes

There is no federal personal income tax in the UAE.

Social Taxes

Coverage: Employers of UAE nationals are required to withhold amounts from them for pension contributions, and the employer also must pay a larger share of the total contributions remitted. No such withholding is required for expatriate employees.

Rates and Thresholds: Employers are liable for pension contributions in the amount of 12.5% of an employee’s salary if the employee is a UAE national. In addition, employees who are UAE nationals are required to make contributions of 5%, which are deducted from their salary and transmitted by the employer along with the employer’s contribution. The national government also makes a contribution of 2.5% of an employee’s salary if the employee is a UAE national.

The minimum and maximum amounts of monthly salary on which pension contributions are assessable are 1,000 and 50,000 respectively.

Details regarding health insurance that employers are required to provide to employees in the emirates of Abu Dhabi and Dubai are available in the “ Bonuses and Special Benefits ” section of this primer.

Taxable Amounts: Pension deductions are made from salary for both work and leave periods. Contributions are not required for periods during which the employee was suspended or otherwise absent without pay, or for periods for which the employee was deprived of pay as the result of a disciplinary or judicial decision.

For employees in the private sector, all contributions are based on the salary received by the employee as of January of each year. For the first calendar year of employment, contributions are based on the salary received during the first month of employment.

For employees in the public sector, contributions are based on the salary received each month.

Returns and Remittance: The employer must transmit pension contributions to the General Pension and Social Security Authority at the beginning of the month after the month in which they accrued. The employer also must submit to the Authority each January a list of the salaries of its employees for that month together with the amount of their monthly pension contributions, and must notify the Authority monthly of any changes in the number and salaries of its employees, on the forms required by the Authority.

Documentation submitted to the Authority generally must be presented in Arabic, although employers may ask the Authority for permission to submit documentation presented in English.

Recordkeeping: Every employer must maintain a retirement file for each covered employee, and submit to the Authority the lists, details, and forms required for implementation of the law, as required by the Board of Directors.

Employers must retain for at least five years records regarding taxes applicable to employees. The period of at least five years starts with the first day of the taxable period after the taxable period during which the taxes were applicable. The retention period may be extended by up to four years if an employer becomes subject to government audit or enters into a dispute with the government regarding tax obligations.

Penalties: An employer that does not make timely pension contributions to the Authority is liable for an additional amount of 0.1% of the amount due for each day of delay. An employer that fails to make pension deductions for an employee, or fails to make deductions according to the employee’s actual salary, is liable for an additional penalty of 10% of the amount due.

Employers that do not timely submit required tax documents to the Authority are subject to a penalty of 1,000 for the first offense in a 24-month period and 2,000 for each subsequent offense during that period. Any person that intentionally provides incorrect information to, or deliberately withholds information from, the Authority for the purpose of obtaining funds from the Authority or avoiding payments due to the Authority may be subject to imprisonment or a fine of up to 5,000 . A private sector employer is subject to a fine of 5,000 per employee for failing to make contributions to the Authority, or for unlawfully forcing its employees to bear a share of expenses not provided for in the law. Employers that did not timely pay a tax amount due also may be subject to a penalty of 2% of the tax liability that was not timely paid, although the penalty rate is 4% for a tax amount that was not paid before the seventh day following the due date of paying the amount.

Employers that do not have permission from the Authority to submit tax documents in a language other than Arabic may be assessed a penalty of 20,000 for failing to submit tax documents in Arabic.

Gulf Cooperation Council Insurance Protection Extension Program: Private sector and public sector employers in the United Arab Emirates are required under the GCC Insurance Protection Extension Program to register employees from other GCC countries who are working in the UAE in the applicable pension or retirement insurance system of their home country, and this is done for the purpose of helping them fulfill retirement plan requirements. The other GCC countries are Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia.

Registration of an employee from another GCC country who is working in the UAE in the pension or retirement insurance system of their home country involves coordination with the UAE General Pension and Social Security Authority, which functions as a liaison to the social insurance agencies of other GCC countries.

Employers in the UAE are required, for each of their employees working in the UAE whose home country is another GCC country, to deduct any applicable contributions from the employee’s wages and make any applicable employer-provided contributions based on requirements of the pension or retirement insurance program of the employee’s home country, and must remit those contributions to a bank account designated by the applicable social insurance agency of the employee’s home country.

An employer in the UAE generally cannot be assessed a higher rate of contribution to the pension or retirement insurance program of another GCC country than would apply under the UAE’s provisions. An employee from another GCC country whose employer in the UAE is not assessed the full employer contribution amount that normally would be required under the other GCC country’s provisions generally is required to be assessed the difference between the amount the UAE employer was required to pay and the amount that the employer would have been required to pay had it been based in the other GCC country, and this additional amount would be deducted from the employee’s wages. Contribution payments under the GCC Insurance Protection Extension Program generally must be made on a monthly basis.

Other Taxes

United Arab Emirate’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.

State/Jurisdiction Taxes

The Abu Dhabi Retirement Pensions and Benefits Fund (ADRPBF) administers pensions and end-of-service benefits for UAE nationals working in or retired from the government, semi-Government, and private sectors in the Emirate of Abu Dhabi, and their beneficiaries.

Coverage: Employers of UAE nationals residing in the Emirate of Abu Dhabi are required to withhold amounts from employees for pension contributions, and the employer also must pay a larger share of the total contributions remitted. No such withholding is required for expatriate employees.

Rates and Thresholds: Employers are liable for pension contributions in the amount of 15% of the employee’s salary. In addition, employees are required to make contributions of 5%, which are deducted from their salary and transmitted by the employer along with the employer’s contribution. The Abu Dhabi government also makes a contribution of 6% of employee’s salary.

The minimum and maximum amounts of monthly salary on which pension contributions are assessable are 3,000 and 60,000 respectively.

Taxable Amounts: Pension deductions are made from salary for both work and leave periods, including basic salary, children allowance, housing allowance, social allowance, and cost of living allowances.

Registration: Employers are required to register all new employees with the Abu Dhabi Retirement Pensions and Benefits Fund no later than 10 days after employment.

Returns and Remittance: The employer must transmit pension contributions to the Abu Dhabi Retirement Pensions and Benefits Fund within seven days after the month in which they accrued. The employer also must submit to the fund each January a list of the salaries of its employees for that month together with the amount of their monthly pension contributions, and must notify the fund monthly of any changes in the number and salaries of its employees.

Recordkeeping: Every employer must maintain a retirement file for each covered employee, and submit to the fund the lists, details, and forms required for implementation of the law.

Penalties: An employer that does not make timely pension contributions to the fund is liable for an additional amount of 0.1% of the amount due for each day of delay. An employer that fails to make pension deductions for an employee, or fails to make deductions according to the employee’s actual salary, is liable for an additional penalty of 10% of the amount due. The fine shall increase according to the number of employees in regard of whom the violation occurred.

Any person that intentionally provides incorrect information to, or deliberately withholds information from the Abu Dhabi Retirement Pensions and Benefits Fund may be subject to imprisonment or a fine of up to 2,500 .

COMPENSATION AND BENEFITS

The UAE’s Labor Law (Federal Law No. 8 of 1980, as amended) governs employment in all emirates of the UAE. Employers are responsible for upholding minimum wage, overtime, hours of work, mandated holiday pay, paid leave time, electronic wage payment requirements, and payment of minimum amounts at termination. With regard to the Dubai International Financial Centre (DIFC), a separate labor law, the DIFC Employment Law (DIFC Law No. 6 of 2018), applies to employees who work or live there. Dubai employers are required to provide health insurance for national and resident employees.

A mandatory retirement plan contribution also is required for UAE national employees with amounts being withheld from employee pay and an additional, greater share paid for by their employers.

Minimum Wage

The Labor Law requires that a minimum wage, payable to employees in general or in a particular area or occupation, and a cost-of-living index be fixed by a federal decree based on a proposal made by the Minister of Labor and Social Affairs and approved by the Council of Ministers. The government has not set a minimum wage amount.

Overtime

An employee who works more than the normal number of hours is entitled to overtime pay of time-and-one-quarter. The overtime rate for work performed between 9 p.m. and 4 a.m. is time-and-one-half. Overtime work is limited to two hours per day unless such work is essential to prevent a substantial loss or serious accident or to eliminate or alleviate its impact. Overtime requirements do not apply to managerial or supervisory positions or to seamen or to the crews of marine vessels.

An employee who works on a day of rest is entitled to either a substitute rest day or overtime pay of time-and-one-half, while an employee who works on a paid holiday or during annual leave is entitled to substitute leave plus overtime pay of time-and-one-half.

Hours of Work

The UAE government has a five-day workweek with its weekend on Friday and Saturday. Private-sector businesses are free to set their own schedules.

The ordinary workday in the UAE is eight hours and the maximum workweek is 48 hours. The workday may be increased to nine hours for commercial establishments, hotels, cafeterias, security services, and other businesses designated by the Minister of Labor and Social Affairs. Daily working hours may be reduced by the minister in the case of arduous or hazardous work. Daily work hours are reduced by two hours per day during Ramadan.

Friday is the normal day of rest for all workers except those who are paid daily. No employee may be required to work more than two successive Fridays unless the employee is paid daily.

Women generally may not be required to work at night, which is defined as the period between 10 p.m. and 7 a.m. The prohibition on night work for women does not apply to women in managerial and technical jobs or to women who work in medical and other services, as decided by the Minister of Labor and Social Affairs.

Holidays

Employers in the UAE must give time off with full pay for the following holidays:

Jan. 1: Christian New Year
Hijra New Year (date varies by year)
Eid Al Fitr (three days; dates vary by year)
Eid Al Adha and Waqfa (three days; dates vary by year)
Ascension Day (one day; date varies by year)
Dec. 2: National Day (two days)
Prophet’s Birthday (date varies by year)

Leave

Employees who have completed at least one year of continuous service with their employers are entitled to 30 days of paid annual leave. Employees with more than six months of continuous service but less than one year are entitled to two days per month of paid annual leave.

The employer may set the date for commencement of an employee’s annual leave and may divide that leave into no more than two periods. An employee loses vacation pay for failing to report to work on the day immediately following vacation.

Employees are entitled to be paid for their annual leave before the leave begins.

Maternity leave: Pregnant employees are entitled to 45 days of maternity leave, including time off before and after the birth of the baby. For employees who have completed at least one year of continuous service with their employers, employees are entitled to maternity leave with full pay. Employees without the requisite year of service are entitled to maternity leave at half pay.

An employee who has exhausted her maternity leave may be absent from work without pay for an additional period of up to 100 consecutive or nonconsecutive days if the absence is due to illness resulting from pregnancy or delivery. The employee must provide a medical certificate confirming that her illness is a result of pregnancy or delivery.

During the first 18 months after delivery, a female worker is entitled to two additional paid breaks per day, of no more than 30 minutes each, for the purpose of nursing her child.

Paternal leave: Effective starting Sept. 25, 2020, parents are entitled to five days of paid leave within six months of a baby’s birth. The leave was granted through an amendment (Federal Decree Law No. 6 of 2020) to the UAE Labour Law.

Sick leave: After completing three months of continuous service with an employer after the probationary period, an employee is entitled to annual sick leave not exceeding 90 days. The first 15 days of sick leave are with full pay, the next 30 days are at half pay, and any subsequent periods are without pay. Employees are not entitled to paid sick leave during the probationary period.

An employee who suffers a non-work-related illness or injury must report the event to the employer within two days. The employer may require the employee to submit to a medical examination for the purpose of verifying the illness or injury.

No paid sick leave is available for illnesses that are the direct result of the employee’s misconduct, such as consumption of alcohol or narcotic drugs.

If an employee resigns due to illness before the first 45 days of sick leave are exhausted and the government medical officer or the medical practitioner designated by the employer accepts a medical cause for the resignation, the employee is entitled to receive pay for the unused portion of the first 45 days of sick leave.

Pilgrimage (Hajj) leave: An employee is entitled to take unpaid leave of up to 30 days for the purpose of performing pilgrimage (hajj). Such leave may be taken only once during the course of employment and may not be deducted from any other period of leave to which the employee is entitled.

Wage Payment

Wages are paid through the Wages Protection System (WPS), an electronic salary transfer system. To join WPS, employers must register with the Ministry of Labor, have a bank account with a bank that operates in the UAE, and contract with an authorized bank, bureau de change, or financial institution to provide the wage transfer service. All costs of participating in the WPS must be paid by the employer and may not be shared in any way with employees.

Wages must be transferred through WPS to employees within two weeks after the period in which they are earned. If employees are paid more frequently than monthly, wages must be paid on the dates specified in the employment contract.

WPS sends an electronic copy of all salary transfer information to the Ministry of Labor, who maintains a database of private sector wage payments to ensure timely payment of wages.

Penalties: Employers that fail to pay wages through the WPS system will be denied new work permits until one month after all wages have been transferred in full. Under a resolution released in October 2016, the definition for what constitutes a late payment is decreased from two weeks to 10 days and the definition of nonpayment will be defined as a delay of one month or more beyond the due date. An employer that fails to pay wages will be denied new work permits, as follows:

until the violation is cured (first violation);
for one month after the violation is cured (second violation);
for two months after the violation is cured (third violation);
for three months after the violation is cured (fourth violation).
The Ministry may impose a ban on issuing any work permits to all institutions owned by the same owners and refer the violation to the court, and the ban will remain in place until the violation is cured or the court proceedings are completed, whichever occurs first.

Bonuses and Special Benefits

Employers are not mandated to provide bonus payments to employees but it is customary to provide a bonus to employees at year-end.

Abu Dhabi Health Insurance: Employers are required to provide all employees and their families (including one spouse and three children under the age of 18) with mandatory health insurance, according to the Abu Dhabi Health Insurance Law.

Employers are not allowed to deduct premiums from employees or to reduce salary to mitigate the cost. Employees only will have to pay the deductible or coinsurance amounts specified under the terms of the policy.

The insurance policies must be valid for one year after the date of issuance and should be renewed annually. The policy must contain basic health care services, with excluded services to be paid by the insured. The health insurance scheme does not replace any existing obligation to procure insurance by way of Workers Compensation Coverage.

Dubai Health Insurance: Employers are required to provide all employees with mandatory health insurance, according to the Dubai Health Insurance Law. The health coverage must include a basic health plan to cover tests, treatment, surgery and maternity procedures.

For employees earning less than 4,000 , employers must provide a plan that meets the Essential Benefits Plan minimum levels of coverage.

The Dubai Health Authority places an annual limit of 150,000 per person on all claims.

Violators of the Health Insurance Law may be fined a minimum of 500 and a maximum of 150,000 .

Termination Pay

Generally, an employee who has completed one or more years of continuous service is entitled to severance pay in the amount of 21 days’ pay for each of the first five years of service and 30 days’ pay for each additional year of service, subject to a maximum total severance package of two years’ pay. An employee is entitled to pro rata severance pay for any partial year worked after the first year of continuous service. Both employer and employee generally are entitled to terminate the employment contract on 30 days’ notice, although shorter notice periods are permissible for daily pay employees who have worked fewer than five years. The employee is entitled to full pay during the notice period.

An employee working under an indefinite contract who quits employment after continuous service of one to three years is entitled to one-third of the severance pay; after continuous service of three to five years, the employee is entitled to two-thirds of the severance pay.

All severance pay can be forfeited for employees who are terminated for cause (or quit to avoid being terminated for cause), quit without giving proper notice, or quit before completing a definite-term contract.

An employee who is terminated or otherwise leaves employment after the period of notice prescribed by law is entitled to be paid for any accrued annual leave.

When an employment contract expires or is terminated, the employer must pay to repatriate the employee to the place of hire or to any other mutually agreed-upon location.

The Ministry of Justice affirmed in September 2011 that the end-of-service gratuity is an indisputable right, even if not specified in an employment contract.

Workers’ Compensation

When an employee suffers a work-related injury or contracts an occupational illness, the employer must file a report with the police and the Labor Department and pay the cost of the employee’s treatment until the employee either recovers or is proven disabled. If the injury or illness prevents the employee from working, the employer also must pay the employee’s full salary for the period of treatment or for six months; whichever is shorter. If treatment lasts longer than six months, the employer must pay half the employee’s pay for an additional six months or until the employee recovers, is declared disabled, or dies; whichever occurs first.

If an employee dies as a result of a work-related injury or illness, the employee’s family is entitled to compensation equal to 24 months of the deceased employee’s wages, subject to a minimum payment of 18,000 and a maximum payment of 35,000 . An employee who becomes permanently disabled as a result of a work-related injury or illness is entitled to the same amount of compensation his or her family would have received if the employee had died. Partial disability results in pro rata compensation according to a schedule set forth in the Labor Law.

No workers’ compensation will be paid if the employee:

intentionally became injured or ill;
was under the influence of a narcotic drug or alcohol at the time of injury;
intentionally violated safety instructions posted conspicuously in the workplace;
became injured or ill as a result of gross and deliberate misconduct; or
refused for no good reason to submit to a medical examination or to undergo the treatment ordered.

Recordkeeping

All employment records are required to be in Arabic. If a foreign language also is used, the Arabic version controls.

Employers with five or more employees must keep the following employment records:

a file for each employee, showing the employee’s:

name;

job;

age;

nationality;

place of residence;

marital status;

date of employment;

wage;

penalties imposed;

occupational injuries and diseases sustained; and

date of and reasons for termination; and

a leave card for each employee, showing all annual, sick, and other leave taken by the employee.

Employers with 15 or more employees must keep the following employment records:

a wage register, listing all employees by date of employment and showing each employee’s:

daily, weekly, or monthly pay;

fringe benefits;

piecemeal or commission pay;

days of work; and

date of termination;

an occupational injuries register showing all work-related injuries and occupational diseases sustained by employees;
work regulations, defining the workday, weekly holiday and other holidays, safety precautions, and fire hazards, which must be posted in the workplace in a visible location; and
a penalty sheet, displayed in a visible location, that lists the penalties that may be imposed on employees and the reasons for which they may be imposed.

Employers must retain for at least five years records regarding compensation and benefits provided to employees. The period of at least five years starts with the first day of the taxable period after the taxable period during which the compensation and benefits were paid. The retention period may be extended by up to four years if an employer becomes subject to government audit or enters into a dispute with the government regarding tax obligations.

FOREIGN WORKERS

Foreign workers generally are covered by the same tax and workplace laws as UAE citizens. Foreign workers do not have to pay into the required retirement plan system.

Visas: An employer may employ a foreign worker in the UAE only with the approval of the Labour Department and after obtaining a work permit from the Ministry of Labour and Social Affairs. The employer also must obtain a residence visa for the foreign worker from the General Directorate of Residency and Foreigners Affairs in the emirate where the worker will live, pursuant to that emirate’s requirements, which generally includes the same documentation as the work permit, plus a medical examination from an approved UAE facility. Employers are required to obtain electronic labor cards and employment contracts for all employees within 60 days of their entrance into the United Arab Emirates.

The Labour Department may not approve employment of a foreign worker unless its records show that none of the unemployed UAE national employees registered with the Labour Section are qualified for the job. If a UAE worker is not available, preference is then given to Arab workers who are nationals of an Arab country.

Under the Labor Law, a work permit will be granted only if the employee:

has the professional competence or educational qualifications needed by the UAE; and
has lawfully entered the UAE and complies with the conditions stipulated by the applicable residence regulations.

Employers may obtain group or individual work permits.

A B1 Group Labour Permit is available to firms who wish to bring in more than 50 foreign workers. The employer must not have any prior labor violations, and must submit an application identifying the nationality, profession, sex, and number of workers, plus documents justifying the need for the workers (such as list of projects, building permits, or contracts). If the group permit is approved, the employer then has six months to submit the workers’ individual labor permits. Each worker must have a passport that is valid for at least six months, and must be between 18 and 60 years old.

A B2 Individual Labour Permit may be obtained by an employer that wishes to hire a single foreign worker. The worker must have a passport that is valid for at least six months and be between the ages of 18 and 60, and the profession assigned to the worker in the application must be commensurate with the activities of the employer. Other documents required depend on the occupation of the worker.

Foreign workers who are between 60 and 65 years old may obtain a work permit only if they work in specific professions, including engineering, medicine, university education, accounting, legal, or other professions approved by the Undersecretary or Assistant Undersecretary.

A work permit granted to a foreign worker may be cancelled if:

the worker is unemployed for more than three consecutive months;
the worker fails to comply with one of the conditions of the work permit; or
the Ministry determines that a particular national worker is qualified to replace the foreign worker, in which case the foreign worker may continue to work until the earlier of the expiration date of his employment contract or work permit.

In addition, a foreign worker who has an employment contract for a limited period and who leaves work without lawful reason before the expiration of that contract may not work elsewhere in the UAE for one year, even with the consent of the former employer. A foreign worker with an employment contract for an unlimited period who leaves employment prior to the end of the requisite notice period also is banned from working elsewhere in the UAE for one year, even with the consent of the former employer. In both instances, however, the one year ban on working does not apply to a foreign worker who obtains prior approval from the Minister of Labor and Social Affairs before obtaining employment from a new employer with the approval of the original employer.

Wages/Payments: No special requirements apply to foreign workers.

WORKING IN THE UNITED STATES

Foreign workers from the UAE must meet general visa requirements and be certified to be employed in the United States. General visa requirements for the U.S. are included in the separate

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, UAE citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes.

State and local taxation of UAE workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes: Generally, nonresidents in the U.S. who are from the UAE and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from the UAE and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: The UAE and the U.S. do not have a tax treaty.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: The UAE and the U.S. have not entered into a social tax totalization agreement.

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no requirements that employees be paid in a particular currency.

TREATY ARRANGEMENTS

The United Arab Emirates has entered into more than 80 income tax treaties, but has not entered into an income tax treaty with the United States.

The countries with which the UAE has a bilateral income tax treaty in effect are Albania, Algeria, Andorra, Armenia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bosnia and Herzegovina, Brunei, Bulgaria, Canada, China, Comoros, Croatia, Cyprus, Czech Republic, Egypt, Estonia, Finland, Fiji, France, Georgia, Germany, Greece, Guinea, Hungary, India, Indonesia, Ireland, Italy, Japan, Jordan, Kazakhstan, Kenya, Kosovo, Kyrgyzstan, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Maldives, Malta, Mauritius, Mexico, Moldova, Montenegro, Morocco, Mozambique, Netherlands, New Zealand, Pakistan, Panama, Philippines, Poland, Portugal, Romania, Russia, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sudan, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, United Kingdom, Uruguay, Uzbekistan, Venezuela, Vietnam, and Yemen. The UAE’s bilateral income tax treaty with Argentina takes effect Jan. 1, 2020. The UAE’s bilateral income tax treaty with Saudi Arabia takes effect Jan. 1. 2020.

A multilateral income tax treaty, the Council of Arab Economic Unity (CAEU) double taxation avoidance treaty, is in effect for the UAE and 10 other countries: Egypt, Iraq, Jordan, Libya, Mauritania, Palestine, Somalia, Sudan, Syria, and Yemen.

The UAE also has an income tax treaty in effect with the special administrative region of Hong Kong.

Additionally, the UAE has an income tax treaty in effect with Jersey, which is a crown dependency of the United Kingdom.

The UAE does not have any totalization agreements for social tax purposes in force.

RESOURCES

General

U.S. State Department: U.S. Relations With United Arab Emirates

U.S. Central Intelligence Agency:

The World Factbook: United Arab Emirates
The World Factbook: Languages

U.S. Department of Commerce: Export.gov: United Arab Emirates - Business Travel

Currency Details

International Organization for Standardization: Currency Codes - ISO 4217

Unicode Consortium: Currency Symbols

United Nations: United Nations Terminology Database: United Arab Emirates

Taxes

Lex Mundi, Doing Business in the United Arab Emirates 2010

PKF, United Arab Emirates Tax Guide 2013

General Pension and Social Security Authority UAE

Abu Dhabi Retirement Pensions & Benefits Fund

Law No. 2 of 2000 Regarding Civil Retirement Pensions and Benefits in the Emirate of Abu Dhabi

Compensation and Benefits

DubaiFAQs.com, Labor Law in Dubai and the UAE

DIFC Employment Law (DIFC Law No. 6 of 2018)

Ministry of Labor: UAE Labour Law

Ministry of Labor: Wages Protection System Guideline

National Human Resource Development and Employment Authority (Arabic with a few pages in English)

Al Tamimi & Company, Labor Law in the UAE

Dubai Health Insurance Law (Arabic)

Dubai Health Authority

Department of Health, Abu Dhabi

Foreign Workers

UAE Ministry of Foreign Affairs

Emirates 24/7, “Pension Plan for Dubai Expats By Year-End,” March 25, 2012

Emirates 24/7, “World Bank Recommends Pension Fund For Expats In Dubai,” Sept. 19, 2012

International Financial Law Review, “New UAE Emiratisation Regulations,” March 3, 2011

The Telegraph, “Dubai Considers Expat Pensions,” Oct. 17, 2012

Working in the United States

U.S. Internal Revenue Service:

IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
IRS Publication 15, Circular E, Employer’s Tax Guide
IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
IRS Publication 519, U.S. Tax Guide for Aliens
IRS Publication 901, U.S. Tax Treaties

U.S. Labor Department, Foreign Labor Certification

Hiring Foreign Workers

Treaty Arrangements

Ministry of Finance: Agreements on the Avoidance of Double Taxation (Arabic)