Tax free and business friendly environment has encouraged many companies to either move base or start a branch in the Middle East, especially in Dubai.
However, the payroll process in a tax free economy is not as simple as it appears. The diverse expatriate nationalities and the ever changing local regulations make payroll an intricate process. Furthermore, a proper documented payroll process has become imperative for all companies operating in the UAE after the implementation of Wage Protection System (WPS) as mandated by the Ministry of Labour in UAE. This development has led to many companies, whether on-shore or off-shore, seeking expert support from outsourced payroll providers.
Outsourcing your payroll in UAE
When you’re operating across borders and employing an international workforce, you need careful planning and scrutiny so that you are both fully compliant with your global HR policies and procedures, and more importantly with local regulation requirements. Companies that are non-compliant will risk facing legal sanctions including fines, being banned from applying for new work permits and can ultimately suffer reputational damage.
With our highly qualified professionals, Livingstones Accountants can manage your end to end payroll process.
Livingstones offer a wide range of payroll services across the Middle East which includes but is not limited to:
- Preparation of standard reports e.g. gross to net, variance, gratuity accruals and pay slips
- Arrange the secured way of salary transfer using multi-currency payments
- Provide systematic monitoring of employees’ loans, reimbursements and advanced payments
- Provide sophisticated pay slip distributions that will allow employees to access their current and previous pay slips anytime, anywhere using unique login details and a self- service portal
- Simplify the intricate process of social security from preparation up to filing reports with the local authorities
- Be fully compliant with labour regulations in all GCC countries including the Wage Protection System (WPS) in United Arab Emirates
- Calculate the provision for end of service benefit and vacation leave entitlement
- Create customised templates or ad-hoc reports for internal and external submission
- Prepare GL report with itemised or summarised journal entries in flexible file format depending on the needs of your accounting department. This can be automatically interfaced into the company’s accounting system.
Wages Protection System
The UAE introduced an electronic salary transfer system in 2009 which allows companies and institutions to pay workers’ wages via banks and financial institutions approved and authorised by the Central Bank.
The Wages Protection System (WPS) was developed by the UAE Central Bank and the Ministry of Labour to ensure timely and full payment of wages through a database. Companies that fail to abide by this process will face punishments and fines and will not be able to obtain work permits.
To participate in this system companies must select one or more banks or agents licensed by the Central Bank. Once the company’s authorised bank receives the salaries, it sends a notification to the Wages Protection System. The system then sends the workers’ details and wages as well as the salary transfer instructions electronically to the Central Bank of the UAE, which will in turn forward those details to the Ministry of Labour database in order to ensure that the details received correspond with those registered with the Ministry. The system will then send the approved information to the appointed agent in order to start paying the wages.
The WPS covers all institutions which have their employees registered with the Ministry of Labour across all sectors and industries, and will benefit different categories of labour.