UAE government warns companies to pay employees on time and in full

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The Ministry of Human Resources and Emiratisation on Monday reminded private companies to transfer the salaries of their employees to bank accounts to avoid fines.

Salaries should be transferred through the Wage Protection System on fixed dates, the ministry said.

"The ministry seeks to ensure the worker’s right to receive his wage in return for his commitment to perform his job duties," said Maher Al Obed, assistant undersecretary at the ministry.

"It also contributes to increasing the worker productivity as a result of paying the wages on time and the specified amount."

The system, introduced in 2009, ensures timely payment of wages.

According to Ministerial Decree No 739 of 2016 concerning the protection of wages, all companies registered with the ministry must subscribe to the WPS and pay salaries through the system.

How does WPS work?

Private sector companies registered with the ministry must open an account with a bank in the UAE. WPS authorises the employer's bank or agent to pay salaries to the employees and the bank then transfers the salary to the employee's bank account.

Salary transfer can be done through banks, bureaux de change and financial institutions approved and authorised to provide the service.

Fines for flouting WPS rules

The authorities will penalise companies that are late in paying salaries and for failure to follow the rules.

Wages not transferred within 10 days of the due date are considered a late payment. These are the fines for flouting rules:

If a company submits incorrect data to evade the transfer of salaries, then a fine of Dh5,000 ($1,360) for each worker and a maximum of Dh50,000 if there are several employees involved is applicable
There is a fine of Dh1,000 per worker if the salaries are not paid by the due date through the system
Getting fake salary slips signed by the employees can lead to a fine of Dh5,000 per worker

All companies and businesses registered with the ministry must sign up with the WPS and those that fail to will be blocked from all new work permits until salaries are fully paid.

Mr Al Obed said any change in salaries should be done through the approved system.

He said employers can also use the 'statement of account' service for salary transfers, which is emailed every month.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.

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Tax authorities are increasingly using data already available across multiple filings to identify audit risks.

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

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Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.

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Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.

8. Pillar 2 implementation

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.

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