Do I Need a Local Entity to Hire in The United Arab Emirates?

In the United Arab Emirates, a "local entity" typically refers to a legally recognized presence such as a subsidiary or branch office that can act as the employer. This setup allows your company to be recognized locally and fulfill payroll and employment obligations. Without a local entity, you cannot manage payroll, register as an employer, or comply with mandatory employment protections effectively.

For companies looking to hire in the UAE without establishing a local entity, utilizing an Employer of Record (EOR) is a viable alternative. An EOR can handle all local employment responsibilities, allowing you to focus on your core business operations.

What is Required to Employ Someone in The United Arab Emirates?

• Local employing entity required to directly employ? Usually yes (unless using an EOR)
• Payroll registration required? Yes (employer registration with the Ministry of Human Resources and Emiratisation)
• Withholding/tax remittance required? Yes (mandatory payroll tax remittance applies)
• Social contributions required? Yes (employer must contribute to social security)
• Local employment agreement required? Yes (written contracts are mandatory in the UAE)
• Mandatory benefits to budget? Yes (end-of-service benefits and health insurance are required)
• Works council/collective agreements considerations? Not applicable (the UAE does not have works councils)

Best Options If You're Hiring in The United Arab Emirates

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about the nature of the contractor relationship.

While hiring contractors in the UAE doesn't require a local entity, misclassification risks exist. If the contractor's role resembles that of an employee, you may face legal challenges. Ensure that the contractor operates independently and is not integrated into your business operations.

• Contractors should have their own tools and resources.
• They should not be under your direct supervision.
• Ensure the work is project-based and not ongoing.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in the UAE, depending on the type of business and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated AED 1,500–AED 4,000 per month ($408–$1,083)
• Payroll provider: Estimated AED 300–AED 800 per employee per month ($82–$218)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated AED 5,000–AED 15,000 per year ($1,361–$4,082)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in The United Arab Emirates

Hiring in The United Arab Emirates can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in The United Arab Emirates quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.