Dubai & UAE Expat Salary Guide · 2026 Gratuity & Tax
The United Arab Emirates operates a zero-income-tax fiscal framework for individual employees. However, evaluating compensation packages in Dubai and Abu Dhabi requires understanding statutory contract structures, basic salary ratios, and End-of-Service Gratuity entitlements.
1. The 0% Personal Income Tax Regime
Under UAE Federal Decree-Law No. 47 of 2022 on Corporate Taxation, while businesses are subject to a 9% corporate tax on net profits exceeding AED 375,000, individual employment income, salaries, wages, and personal capital gains remain completely tax-exempt for both UAE citizens and expatriates.
2. Contract Breakdown: The 60/40 Basic Salary Split
UAE employment contracts typically divide total remuneration into "Basic Salary" and "Allowances" (such as housing allowance, transport allowance, and annual flight allowances). A common market ratio is 60% basic pay and 40% allowances. Negotiating a higher basic percentage is critical because end-of-service gratuity and overtime are calculated solely on basic salary.
3. Statutory End-of-Service Gratuity Mechanics
Under UAE Federal Decree-Law No. 33 of 2021 (the UAE Labour Law), full-time employees completing at least one continuous year of service are entitled to an End-of-Service Benefit (Gratuity): 21 calendar days of basic wage for each of the first five years of service, and 30 calendar days for each subsequent year. Total gratuity payout cannot exceed two years' gross basic salary.
4. Modern Workplace Savings Schemes (DEWS)
In free zones like DIFC and increasingly across public and private sector employers, the traditional end-of-service lump sum is being replaced or augmented by defined-contribution workplace savings schemes (such as the DIFC Employee Workplace Savings / DEWS plan), allowing employees to direct gratuity accruals into institutional investment funds.
All figures, threshold ceilings, and contribution formulas in this guide are grounded directly in published legislation from the UAE Ministry of Human Resources & Emiratisation (MOHRE) Labour Law Guidelines ↗ .