How to Run Payroll in the UAE

The short answer

To run payroll in the UAE you calculate gross pay, apply social insurance for UAE national employees only, account for end-of-service gratuity, and pay salaries electronically through the Wage Protection System by submitting a Salary Information File to your bank. There is no personal income tax. Mellow automates the calculation and generates the WPS file.

Step by step

1. Calculate gross pay. Start with the employee's salary and any allowances, in dirhams.

2. Apply social insurance — for nationals only. UAE and GCC nationals are enrolled in a social insurance scheme, broadly 5% from the employee and 12.5% from the employer, with a higher employer rate in Abu Dhabi. Expatriate employees are not in this scheme and have no social insurance deduction.

3. No income tax. The UAE does not levy personal income tax. For most employees there is no tax line on the payslip at all.

4. Account for end-of-service gratuity. Instead of a pension, UAE employees accrue end-of-service gratuity — broadly 21 days of pay for each of the first five years of service, and 30 days for each year after. This should be tracked and accrued as a liability.

5. Pay through WPS. The Wage Protection System is mandatory. Salaries must be paid electronically, and you submit a Salary Information File — a SIF — through your bank so the authorities can confirm employees were paid correctly and on time.

How Mellow helps

Mellow calculates UAE payroll with these rules built in — social insurance for nationals, no income tax, and end-of-service gratuity accrual at the correct rates. It produces payslips in dirhams and generates the WPS Salary Information File ready for you to upload through your bank's WPS portal.

Mellow does not connect directly to bank WPS systems — it generates the file and provides a step-by-step submission guide, keeping the bank upload in your control.

The bottom line

UAE payroll is light on tax but specific on process. The two things to get right are end-of-service gratuity and the WPS file. Mellow handles both, inside a full HR platform from AED 19 per employee per month. See Mellow pricing.