Despite very lenient tax laws for employers and employees, there may be some expenses that you may not account for in the wage for your employee on the first look. As you think on hiring another extraordinary member of your team, there should be a few aspects you should have in mind.
Payroll taxes
As with other countries in the GCC, UAE does not have any form of individual nor corporate income tax, but it does when it comes to social security taxes, which differ for resident employees and expatriate employees. For UAE nationals, employers have to pay the General Pension and Social Security Authority (GPSSA) by the 10th of each month which incurs 12.5% of the employee’s monthly salary, with 10% additional fee if sent at a later date and need to be paid physically in cheque directly in the government office. When it comes to expatriates, with their residence permits acquired to even be employed, the employer needn’t to pay the GPSSA in full, but only medical care which is required by law to be paid for every employee since June 2016. All of the payroll documents and cheques of payments need to be kept in line for the following 10 years, so it’s not uncommon to run after accounting and bookkeeping companies to manage your paperwork efficiently.
Paid time-off
Additional to the incurring costs of GPSSA, you must account for the loss whenever your employee applies for a sick leave. These account for 90 days per year after the employee has their probation period expired and has worked an additional 3 months afterwards. For the first 15 days of leave, the employer must give out full pay to the employee, half pay for the next 30 days and the following 45 are not paid. This time can be aggregate or continuous during the year, so be careful on how you make your plans with your employees to make sure they are there to do their part!
Overhead costs
All of these costs before do not even account for all other costs other than those related to the wage of your new employee! In a typical office, additional expense for the employee may be:
- Work space (e.g. computer, desk, chair, office space etc.)
- Office supplies (paper, pens, printer toners etc.)
- Educational seminars – to teach them how to work within your firm and what to expect
- The whole process the HR department goes through
- Miscellaneous that your firm may have, such as: mobile phone, protective gear, computer servers and so on.
Including all of these, in a case where you may pay a UAE national to be a part of your team for a wage of AED 18 000, you will pay AED 20 250 with all the additional costs depending on the type of work you do! These are some important things to keep in mind when you are hiring in order to maintain your budget and efficiency, so do not abstain from outsourcing some parts of your business in order to grow.