The WPS salary UAE is an electronic salary transfer system. Its main function is to allow institutions to pay salaries through banks, exchange houses, and other financial institutions to provide the service. The Central Bank of the United Arab Emirates and the Ministry of Human Resources and Emiratization are the ones that developed this system. The WPS salary system guarantees the timely and complete payment of salaries for each employee. In addition, the system covers all institutions belonging to the Ministry in all sectors and industries.
In this article, we will explore the importance of the WPS salary check and how it has improved the lives of workers in the UAE. We will also discuss how the WPS has improved the efficiency of the wage payment process. In addition, it reduces the possibility of late payments. Finally, we will analyze how the WPS salary helps companies comply with government regulations. It also improves transparency in the payment and salary process.
According to the terms of their job contracts, employers and employees agreed that WPS salary would be payable one day after payday. After 15 days from this due date, payments are considered late. In every given month, 90% of the company’s employees must be compensated (allowing for some unpaid absence).
WPS Salary UAE Regulations and Compliance in UAE
One of the initiatives of the Ministry of Emiratization and Human Resources (MoHRE) and the Central Bank of the UAE is the Wage Protection System (WPS). The WPS Salary is a system to protect the salaries of employees in the UAE. The idea of this is to ensure that workers in the UAE receive adequate wages promptly.
The WPS Salary system has a database where employers have to upload the minimum salary of the employees. Thus, the MoHRE and the Central Bank can validate the information. You have to know that currently, new clarifications and regulations have been presented.
According to Ministerial Resolution No. 43 of 2022, there are the following key regulations that employers regarding the WPS salary check have to comply with:
- New employees must join the WPS within one month of their employment start date.
- The WPS salary expires one day after the payday that employers agreed to with their workers. That is, following the policies of their employment contracts.
- Payments will be late after 15 days of this due date.
- In addition, 90% of the company’s employees have to be paid a certain month. Thanks to this, they have access to some unpaid leave. For instance, the additional days of maternity leave.
- However, the employer has to notify MoHRE about the duration and existence of such unpaid leave.
- 80% of an employee’s WPS salary must be paid in any specific month. Thanks to this, some deductions can be applied.
- However, the employer must be willing to present evidence of such deductions. Especially when going through the application process.
- Even though workers do not have an agreement with the employer on a particular payday, WPS salary has to make payment once a month.
It is important to note that these regulations do not apply to non-WPS payments.
Auditing and Inspection Procedures
According to the Tax Procedures Law (Federal Decree-Law No. 7), a tax audit is a procedure that is the obligation of the Federal Tax Authority. The purpose is to inspect business records or any information or data regarding a business person. The FTA carries out tax audits in the UAE to allow the government to evaluate aspects of entities. Specifically, those subject to taxes about tax laws and requirements.
These tax laws and requirements have to be by VAT laws and excise laws. Through the tax audit, the FTA will examine whether taxpayers have paid all their obligations. Also, whether companies collect all taxes and deliver them to the government within the corresponding deadline.
According to article (17) of the Tax Procedures Law, the FTA can carry out the tax audit in its office. In addition, to do so for commercial premises of the taxable person or in any place where the person does his business. That is places where the entity stores goods or maintains records.
FTA authorities must inspect tax returns and other information during an audit. Additionally, there is no need to have a particular reason for the FTA to audit the taxable entity. That is, the FTA can carry out tax audits in the UAE at any time and for any reason.
However, the FTA must send notice to the company. Which must be at least five days before the scheduled date for the tax audit. This is according to Article 17 of the Tax Procedures Law. Under normal circumstances, the tax audit will be during FTA business hours. This is according to Article 19 of the Tax Procedures Law.
Updates and Changes in WPS Salary UAE Regulations
One of the main changes regarding the WPS salary UAE requirements is an increase in the minimum amount of an employee’s salary. Which has to be paid through WPS. The amount has gone from 80% to 90%.
The resolution highlights several other key requirements that private-sector employers must meet.
- If salaries are not transferred before the 15th of the month. Otherwise, the company may suffer a WPS salary block on the 17th of the following month.
- 90% of total salaries have to be transferred monthly to prevent the company from suffering a blockage. In addition, it is subject to fines.
- All employers have a 30-day grace period to transfer salaries for new employees. Of course, through the WPS salary system.
On the other hand, employers have to ensure they comply with the following points. This way, you can guarantee that your company fully complies with the new MOHRE resolution.
- A minimum of 90% of employees’ salaries must be paid through the WPS system.
- Any employees who are no longer with the company but remain under its sponsorship must cancel their visas immediately. Alternatively, the company may place them on unpaid leave.
- It is mandatory to resolve any salary reduction agreements made with employees, regardless of the reason. This has to be after payroll processing.
- The MoHRE will only allow salary reductions for employees who are on unpaid leave. Additionally, the employer has to apply for this early unpaid leave through the MoHRE system. Subsequently, you have to attach the contract with the signatures of both parties.
- Only a deduction of 20% of the worker’s monthly amount is valid.
- WPS salary exemptions are only valid for employees located outside the country. However, your absence may have to be registered with the MoHRE.
Taxation and Deduction Modifications
The first thing you have to know is that it is a deduction. Deductions are allowable expenses or losses that can be subtracted from a business’s total taxable income. That is, the tax obligation is reduced.
According to the UAE Corporate Tax Law, available deductions are expenses that form part of the business as a whole. This is to generate income. For example, rents, salaries, repairs, and provisions for bad debts. In addition, impairment losses and donations to government-approved charities.
On the other hand, according to the CT law of the UAE, a tax deduction is an amount of expense that can be subtracted from the total taxable income of a taxable person. This must be done when calculating the tax obligation of said taxpayer. Tax deductions are legal incentives provided under the provisions of the law. In addition, they are deductible by taxpayers.
In Article 28 you will see various expenses that a taxable person can claim as deductions. Thus, you can reduce your tax payable under the UAE Corporate Tax Law.
In addition, Article 30 of the UAE Corporation Tax Law establishes the rules of limitation of the General Interest Deduction. That is, an individual can claim the General Interest Deduction by deducting up to 30% of their profits. This has to be in the concept of Net Interest Expense.
A taxable person’s net interest expense is the difference between the interest expenses incurred. Of course, during the tax period. It is important to include any net interest expense carried forward in the total amount.
Documentation Required for WPS Salary UAE
It is important to know what documents are necessary for the WPS salary system in UAE. This way, you can use the WPS for salary by the provisions of the UAE labor laws. Below, you can see what documents will be necessary for this case:
- A copy of your valid business license or professional license. It is essential to include the list of partners.
- Copy of valid Emirates ID/Passport. Additionally, the visa page of all partners and those listed on the business license along with their contact details.
- The official email address of the company.
- Full details of the company address, including Emirate, area name, street name, building name, door/shop number, nearest landmark, name of contact person, address profession, and contact number.
It is important that you make sure to place the company seal on all the documents mentioned above.
Employment Contracts and Agreements
Employee employment contracts in the UAE are legal agreements that bind the employee to their employer. In addition, the agreement consists of necessary employment terms, such as the designation, remuneration, start date, and the requirements of the employment relationship. In this way, all business models in the UAE are based on an employment contract.
There are two types of employment contracts in the UAE according to UAE Labor Law Number 8 of 1980. These are limited and unlimited contracts. Each one has its own peculiarities and you should know them. On the one hand, the limited contract has a limited or fixed duration and is a legal agreement between employee and employer that specifies the duration of employment.
On the other hand, the unlimited contract has no expiration date and is suitable for permanent roles or long-term projects. Despite this, in the UAE there are other types of work, such as:
Part-time: Thanks to this contract, employees will be able to work for one or more employers during specific days or hours.
Temporary work: The employee works on a specific task and the contract ends upon completion of this task.
Remote work: All work is done outside the workplace.
Flexible working: Employees have the opportunity to choose their own work schedule.
Job sharing: This is when two or more people share the same full-time workload. Additionally, this model typically includes alternate days and split workdays.
This way, you can establish how to pay international and national employees. Also, it will help you have a better Salary information file WPS.
Company Registration and License
The process to register a company consists of approval of the company name, selection of its commercial activity, presentation of documents, and obtaining a business license. In addition, companies with UAE registration have 100% foreign ownership, full profit repatriation, and other benefits.
In this way, foreign investors see the country as a good investment opportunity. Thanks to the ease of doing business, improved business infrastructure, etc., investors from all over the world are attracted to the UAE. On the other hand, investors have a wide range of company registration options in the region.
There are many business licenses and business activities that are available and will be able to fit your business requirements exactly. Furthermore, the process of starting a business in the UAE is simple if the steps are followed correctly. On the other hand, UAE company registration can be classified into; free zone, continental, and extraterritorial jurisdiction.
It is possible to establish extraterritorial companies and free zones with 100% participation of expatriates. However, these differ in their characteristics, applicable commercial laws, and commercial operations. Additionally, company registration in the UAE has a minimum cost of AED 8,050 in free zones and will vary depending on facilities and visa availability.
Common Legal Issues and Solutions
Problems can always arise and that is why it is important to always WPS salary check. For this reason, it is always important to know what problems can be observed and how they can be solved.
Payment delays: This problem is very common and the company may face sanctions and fines. Furthermore, these vary according to the size of the company. In this way, if employees’ salaries are not paid within 10 days after the due date, they may face sanctions. Among these, we find that the owner will not be able to register new companies or the MoHRE will take action.
Therefore, as the days of delay increase, the sanctions and fines will increase. For this reason, the most effective way to solve this problem is to have clear control of employees and their payments. In addition, this task can be assigned to a third-party company that is a specialist in the subject.
Another problem that can arise is that incorrect data is intentionally provided. All this, in order to evade salaries or payment of salaries. In this case, a fine of AED 5,000 will be imposed on the company for each worker who has been affected. Therefore, a simple solution is to make sure you always provide the correct information and avoid any inconveniences.
Additionally, if you want to make a WPS salary transfer it is important that you verify that all the data is correct. As mentioned above, you may receive sanctions and fines if you deliberately provide erroneous data to evade your responsibilities. In this way, if you want to avoid any legal problems, you can do so by hiring a company specialized in these issues that can help you.
