Payroll & WPS in United Arab Emirates

How to set up payroll & wps in United Arab Emirates

1. 1Load employee master data — contract type, basic pay, allowances, nationality and social-insurance status.
2. 2Configure statutory deductions: mohre requires private-sector salaries to be paid through the wage protection system within 15 days of the due date, and end-of-service gratuity accrues at 21 days' basic pay per year for the first five years and 30 days thereafter.
3. 3Run the payroll, review the variance report against last month, then approve.
4. 4Generate the salary file — WPS (Wage Protection System) SIF files lodged through a UAE Central Bank agent — and upload it through your bank.
5. 5Post the payroll journal, accrue leave and end-of-service, and keep the payslips retrievable for the statutory period.

Payroll & WPS document requirements in United Arab Emirates

• The words "Tax Invoice" must appear clearly on the document
• Supplier TRN and, for B2B supplies over AED 10,000, the recipient TRN
• Sequential invoice number, date of issue and date of supply where different
• VAT amount shown in AED with the exchange rate used if the invoice is in another currency
• Arabic is accepted alongside English; the FTA may request an Arabic version

MOHRE requires private-sector salaries to be paid through the Wage Protection System within 15 days of the due date, and end-of-service gratuity accrues at 21 days' basic pay per year for the first five years and 30 days thereafter. Salary files are produced as WPS (Wage Protection System) SIF files lodged through a UAE Central Bank agent, and payments reconcile against statements from Emirates NBD, First Abu Dhabi Bank, Mashreq, ADCB, RAKBANK, Wio.

Payroll & WPS mistakes that cost money in United Arab Emirates

• Paying salaries outside the protected wage channel, which exposes the licence to suspension in United Arab Emirates.
• Understating accrued end-of-service liability so the balance sheet flatters equity.
• Mismatches between the salary file and the registered contract value, which cause file rejection.

Penalties applied by Federal Tax Authority (FTA)

• AED 10,000 for failing to register for VAT on time
• AED 1,000 for a first late VAT return, AED 2,000 for a repeat within 24 months
• 14% per annum monthly penalty on unpaid tax, applied from the day after the due date
• AED 5,000 per incorrect or non-compliant tax invoice issued
• AED 10,000 for failing to keep the required records (AED 20,000 on repetition)

Figures reflect the published position of Federal Tax Authority (FTA) and should be confirmed on EmaraTax before you rely on them for a filing decision.

Payroll & WPS in United Arab Emirates: frequently asked questions