How Salary Deductions Work in the UAE (2026 Guide) (2026)
The UAE takes nothing in income tax from your salary — but “no income tax” doesn’t mean “no deductions.” Here’s what actually comes off a UAE paycheck in 2026, who pays what, and the end-of-service payout most expats underestimate.
Zero income tax — confirmed for 2026
The UAE levies 0% personal income tax on employment income. In December 2025 a rumour circulated about a 5% PIT from January 2026 — it is false: no federal decree supports it, and the Ministry of Finance, Federal Tax Authority, PwC, EY and KPMG all confirm 0% for 2026. The 9% corporate tax applies to business profits above AED 375,000 only, never to wages. There are no emirate-level income-tax differences; the 5% VAT is on goods and services, not salaries.
GPSSA pension — Emiratis in the private sector
Two regimes run side by side, split by first GPSSA registration date:
| New regime (reg. ≥ 31 Oct 2023) | Old regime (reg. before) | |
|---|---|---|
| Employee | 11% | 5% |
| Employer | 15% (12.5% + 2.5% govt top-up under AED 20k) | 15% |
| Salary band | AED 3,000–70,000/mo | AED 1,000–50,000/mo |
The base is your contribution salary — basic plus regular allowances, bonuses and commissions as per your contract. Dubai private-sector Emiratis fall under federal GPSSA; Abu Dhabi has its own fund (ADPF) mainly for the government sector.
ILOE — the AED 5–10 everyone pays
The unemployment-insurance scheme (FDL 13/2022) is mandatory in 2026 for Emiratis and expats, including most free zones: AED 5/month when basic salary is AED 16,000 or less, AED 10/month above it, plus VAT. Exemptions: investors/owners, domestic workers, temporary staff, under-18s, and retirees starting a new job.
Expat gratuity — not a deduction, but real money
Under FDL 33/2021 (Article 52): 21 days’ basic wage per year for the first 5 years, 30 days per year after, pro-rated for partial years, capped at 2 years’ total wage. Minimum 1 year of service. The new law abolished the old resignation reductions — no more one-third/two-thirds cuts — and it’s forfeited only for gross misconduct. Example: basic AED 12,000 × 5 years → 5 × 21 × 400 = AED 42,000.
2026 changes to know
1. Emirati private-sector minimum salary: AED 6,000/month from 1 January 2026 (existing staff adjusted by 30 June 2026; penalties from 1 July). 2. The 5% PIT rumour is debunked — 0% stands. 3. ILOE enforcement continues with fines for the unenrolled.
Worked examples
Example 1 — Emirati, AED 20,000/month (new regime): GPSSA 11% × 20,000 = AED 2,200; ILOE AED 10 → take-home AED 17,790.
Example 2 — Emirati, AED 15,000/month: GPSSA AED 1,650 (employer pays 12.5% × 15,000 = AED 1,875 plus the 2.5% government top-up of AED 375, since salary < AED 20,000); ILOE AED 5 → take-home AED 13,345.
Example 3 — expat, AED 20,000/month: ILOE AED 10 only → take-home AED 19,990.
Common mistakes
1. Pricing in a 5% income tax that doesn’t exist. Job offers and salary comparisons sometimes still mention it — the law says 0%.
2. GCC nationals assuming GPSSA covers them. GCC nationals in the UAE are covered by their home country’s scheme via the extension system, at home rates — not GPSSA.
3. Ignoring ILOE enrolment. It’s AED 5–10/month, but the fine for skipping it is AED 400.
4. Confusing gratuity with a deduction. Gratuity accrues as a future payout; it never reduces your monthly pay.
Try it: United Arab Emirates salary calculator →
United Arab Emirates — frequently asked questions
United Arab Emirates salary FAQs
Is there really no income tax in the UAE?
Correct — 0% personal income tax on employment income in 2026, confirmed by the Ministry of Finance, the Federal Tax Authority and every Big-4 firm. The December-2025 rumour of a 5% tax was false.
How much is the GPSSA deduction?
Emiratis in the private sector: 11% of contribution salary (AED 3,000–70,000/month) if first registered on/after 31 October 2023; 5% (AED 1,000–50,000) if registered before.
What is ILOE and who pays it?
Mandatory unemployment insurance: AED 5/month (basic ≤ AED 16,000) or AED 10/month (basic above), plus VAT. Emiratis and expats both pay it.
How is UAE gratuity calculated?
21 days’ basic wage per year for the first 5 years plus 30 days per year after, pro-rated, capped at 2 years’ wage. No resignation reduction under the current law.