Neither the UAE nor Saudi Arabia taxes your salary. That is a big reason tech workers move to the Gulf. But “tax-free” has limits. You still pay VAT on what you buy. Your end-of-service pay follows set rules. And your home country may still want to tax you.
This guide covers the basics. It is general information, not tax advice. For your own situation, speak to a qualified tax adviser in your home country.
UAE
No income tax on salaries
The official UAE government portal says: “The UAE does not levy income tax on individuals” (u.ae). Your employer pays your salary in full, with no tax deducted.
Corporate tax: only if you run a business
The UAE introduced a federal corporate tax for financial years starting on or after 1 June 2023. The rate is 0% on taxable income up to AED 375,000 and 9% above that (u.ae).
It applies to businesses, and to individuals “conducting business activities under a commercial licence in the UAE”. A salary from an employer is not a business activity. But if you also freelance or run a side business with a licence, corporate tax rules may apply to that income. Check with the Federal Tax Authority or a tax adviser.
VAT
The UAE charges 5% VAT on the purchase of goods and services, and excise tax on specific goods that are harmful to health (u.ae).
End-of-service gratuity
Private-sector employees in the UAE get an end-of-service gratuity when they leave, if they have worked at least one year. Under the UAE Labour Law, as explained on the official portal (u.ae):
- Less than 1 year: no gratuity.
- 1 to 5 years: 21 days’ salary for each year of work.
- More than 5 years: 30 days’ salary for each year after the first 5.
- Cap: the total cannot be more than 2 years’ wages.
- Basis: your basic salary only. Housing, transport and other allowances are not included.
- Timing: your employer must pay it, with any other amounts owed, within 14 days of your contract ending.
Because gratuity uses basic salary, ask for the basic figure in any offer. Our salary guide explains how packages are split.
The Savings Scheme. Employers can choose an alternative to the traditional gratuity. Under the voluntary Savings Scheme, the employer pays a monthly contribution into an approved investment fund instead: 5.83% of basic salary for employees with under 5 years’ service, and 8.33% after 5 years (u.ae). Ask your employer which system they use.
Free zones can have their own employment rules, so check your contract if you work in a free zone.
Pensions
Employers must register Emirati employees in the UAE pensions and social security system (u.ae). As a foreign employee, your main end-of-service benefit is the gratuity or the Savings Scheme described above. Ask your employer whether they offer any extra pension or savings plan, and check what happens to your pension at home while you’re away.
Saudi Arabia
Income tax
The Saudi tax authority, ZATCA, describes income tax as applying to business activity: commercial, industrial, agricultural, service, banking, insurance and investment activities, and other activities for profit. The implementing regulations apply to the non-Saudi shareholders of resident companies, and to non-residents who do business or earn income in Saudi Arabia (ZATCA, ZATCA).
A salary from an employer is not one of these activities, so employees don’t pay income tax on their pay. If you also run a business or earn other income in Saudi Arabia, check the rules with ZATCA or a tax adviser.
VAT
Saudi Arabia introduced VAT in 2018 at 5% (ZATCA). The rate is now 15% (ZATCA), three times the UAE rate.
Social insurance (GOSI)
Non-Saudi employees are registered with the General Organization for Social Insurance (GOSI) under the occupational hazards branch, which covers work injuries. GOSI’s own guidance, for example on maternity benefit, refers to contributors under this branch “whether the contributor is Saudi or non-Saudi” (GOSI). Check GOSI’s website or your payslip for the current contribution rates and who pays them.
Expatriate fees
Saudi Arabia charges fees on expatriate workers and their dependants. Premium Residency holders are exempt (Premium Residency Center). Before you accept an offer, ask whether your employer pays these fees for you and your family.
End-of-service award
The Saudi Labour Law also gives employees an end-of-service award. The amount depends on your length of service, your wage and how the contract ended. Read the current Labour Law on the Ministry of Human Resources and Social Development website (MHRSD), and ask your employer how they calculate it.
Your home country may still tax you
Moving to a country without income tax doesn’t always end your tax obligations at home. Rules differ a lot by country. Two examples:
- United States. US citizens and resident aliens living abroad are “subject to tax on worldwide income from all sources” (IRS). You still file a US return. If you qualify, the Foreign Earned Income Exclusion lets you exclude up to USD 130,000 of foreign earned income for tax year 2025 and USD 132,900 for 2026 (IRS).
- United Kingdom. Your UK tax residence usually depends on how many days you spend in the UK in the tax year, under the Statutory Residence Test. In the year you move, the tax year can be split into a UK-resident part and a non-resident part (GOV.UK).
Before you move, check:
- When you stop being tax resident at home, and what you need to do to show it.
- Whether you still owe tax on income from home, such as rent or investments.
- Whether a tax treaty exists between your home country and the UAE or Saudi Arabia.
- What happens to your home pension contributions while you’re away.
Frequently asked questions
Do I pay income tax on my salary in Saudi Arabia?
No. ZATCA describes income tax as applying to business activity, such as commercial, service or investment activities for profit, and a salary from an employer isn’t one of these activities. If you also run a business or earn other income in Saudi Arabia, check the rules with ZATCA or a tax adviser before you start.
How is end-of-service gratuity calculated in the UAE?
It’s based on your basic salary only. After at least one year, you get 21 days’ basic salary for each of your first five years and 30 days for each year after that, capped at two years’ wages. Your employer must pay it within 14 days of your contract ending. Some employers use the Savings Scheme instead.
Do US citizens pay tax while working in Dubai?
Yes, US citizens and resident aliens living abroad are taxed on worldwide income and still file a US return. If you qualify, the Foreign Earned Income Exclusion lets you exclude up to USD 130,000 of foreign earned income for tax year 2025 and USD 132,900 for 2026. Speak to a qualified US tax adviser.
Does UAE corporate tax apply to freelance work?
It can. UAE corporate tax applies to individuals conducting business activities under a commercial licence, at 0% on taxable income up to AED 375,000 and 9% above that. A salary from an employer isn’t a business activity, but licensed freelance or side-business income may be covered. Check with the Federal Tax Authority or an adviser.
Do foreign employees get a pension in the UAE?
As a foreign employee, your main end-of-service benefit is the gratuity, or the voluntary Savings Scheme, where your employer pays 5.83% of basic salary a month for under five years’ service and 8.33% after. Employers must register Emirati employees in the UAE pension system. Ask whether your employer offers an extra pension plan.
Do expats pay social insurance in Saudi Arabia?
Non-Saudi employees are registered with GOSI under the occupational hazards branch, which covers work injuries. This guide doesn’t quote contribution rates, so check GOSI’s website or your payslip for the current rates and who pays them. Ask your employer too, and compare this with your home-country pension.