UAE payroll calculator
Split basic salary and allowances, confirm net pay with no personal income tax, and estimate the end-of-service gratuity accruing on basic pay — all in one place.
Salary details
Gratuity is based on basic salary only.
Housing, transport and other allowances combined.
Payroll summary
Gratuity accrues on basic salary using the 21/30-day rule.
Run payroll, WPS and gratuity provisions inside your books.
Get startedResults are estimates for guidance only. Pension or social-security contributions may apply for UAE and GCC nationals and are not modelled here. Confirm your payroll and end-of-service obligations with MoHRE, the FTA where relevant, or a specialist.
How UAE payroll works
UAE payroll is simpler than most because there is no personal income tax on salaries — gross pay is net pay from a tax standpoint. The two things that shape the numbers are the basic/allowance split and the end-of-service gratuity that accrues on basic pay over time.
No income tax
There is no PAYE-style withholding. Net salary equals gross for tax purposes.
Basic vs allowances
Gratuity uses basic salary only, so the split between basic and allowances drives the end-of-service cost.
Gratuity accrual
21 days of basic per year for the first 5 years, 30 days beyond, capped at 2 years of basic salary.
Worked example
Basic AED 8,000, allowances AED 4,000 — gross and net pay are both AED 12,000 (no income tax). Daily wage = 8,000 ÷ 30 = AED 266.67. In the first 5 years the annual accrual is 21 days = AED 5,600, or about AED 466.67 per month. After 3 years of service, gratuity accrued to date is 3 × 21 × 266.67 = AED 16,800.
Recognising a monthly gratuity provision keeps the growing end-of-service liability on your books instead of hitting your P&L all at once when someone leaves. Salaries themselves are paid through the Wages Protection System (WPS), which governs how and when wages are transferred.
Payroll and provisions in one place
Set up salary payments with our WPS guide for the UAE, and use the gratuity calculator for a full end-of-service figure. AIMuhaseb keeps staff costs and gratuity provisions current in your books.
Payroll calculator questions
Is there personal income tax on salaries in the UAE?
No. The UAE does not levy personal income tax on salaries or wages, so there is no PAYE-style deduction from employee pay. Gross salary is effectively net pay from a tax standpoint. Employers still have obligations such as paying salaries through the Wages Protection System (WPS) and accruing end-of-service gratuity, but no income tax is withheld.
What is the difference between basic salary and allowances?
Basic salary is the core contractual wage, while allowances (housing, transport, and others) are added on top to make up the gross package. The split matters because UAE end-of-service gratuity is calculated on basic salary only — allowances, bonuses and overtime are excluded. A common structure sets basic at around 50 to 60% of the total package, but the exact split is set in the employment contract.
How is gratuity accrual estimated from payroll?
Gratuity accrues on basic salary using the daily wage (basic ÷ 30). For each year of service you accrue 21 days of basic pay in the first 5 years and 30 days per year beyond 5, capped at 2 years of basic salary overall. This calculator shows both the gratuity accrued to date and an indicative monthly provision, so you can reflect the cost in your books as it builds up.
What is WPS and does it affect payroll?
The Wages Protection System (WPS) is a MoHRE and UAE Central Bank salary-transfer system. Employers registered with MoHRE submit a Salary Information File (SIF) so wages are paid through approved channels. It does not add tax to payroll, but it governs how and when salaries must be paid. See our WPS guide for how to set it up.
Are end-of-service benefits a cost I should record monthly?
Yes. Because gratuity builds up over an employee's service, good practice is to recognise a monthly provision for the accruing end-of-service liability rather than taking the full cost only when someone leaves. This keeps your P&L and balance sheet accurate, which is exactly what an accounting system like AIMuhaseb automates.
Does this calculator deduct social security or pension?
For UAE and GCC nationals, pension and social security contributions can apply and are shared between employer and employee under the relevant scheme. This calculator focuses on the basic/allowance split, the absence of personal income tax, and gratuity accrual. Confirm any pension obligations for national employees with a specialist before finalising payroll.
Keep going
Gratuity calculator
Full end-of-service gratuity figure.
WPS guide
How to pay salaries through the WPS.
Accounting services
Hand payroll and books to a UAE team.
Payroll that flows into your accounts
AIMuhaseb keeps salaries, allowances and gratuity provisions reflected in your P&L and balance sheet in real time.
Get startedGet started with AIMuhaseb
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