Net Monthly
AED 23,583
Net Annual
AED 283,000
Retention Rate
94.3%
| Monthly Contract | Net Monthly | Net Annual |
|---|---|---|
| AED 15,000 | AED 13,583 | AED 163,000 |
| AED 20,000 | AED 18,583 | AED 223,000 |
| AED 25,000 (you) | AED 23,583 | AED 283,000 |
| AED 30,000 | AED 28,583 | AED 343,000 |
| AED 40,000 | AED 38,583 | AED 463,000 |
| AED 50,000 | AED 48,583 | AED 583,000 |
Contractor vs employee in UAE?
Contractors manage their own visa, insurance, and do not receive end-of-service gratuity or paid leave benefits. However, contractors typically command higher monthly rates to compensate for these costs and the lack of job security. As a contractor, you also have more flexibility in choosing clients and projects.
Do contractors need a visa in UAE?
Yes, to work legally in the UAE you need a valid residence visa. Contractors typically obtain a freelance visa through a free zone (e.g., Dubai Media City, twofour54, ADGM) or set up a sole establishment on the mainland. Tourist visas do not permit you to work.
What about VAT for contractors?
If your annual turnover exceeds AED 375,000, VAT registration is mandatory at 5%. You must charge VAT on your invoices, file quarterly returns, and can reclaim VAT paid on business expenses. Voluntary registration is available at AED 187,500.
Note: This calculator shows a simplified view. Actual contractor costs may include office space, professional fees, accounting, and other business expenses.
How contracting works, what you keep, and the key differences from permanent employment
What is a contractor in the UAE?
A contractor is someone who provides services to a client under a commercial agreement rather than an employment contract. You work on a project or fixed-term basis and invoice the client for your services. In the UAE, contractors typically operate through a freelance visa, a free zone company, or a mainland sole establishment.
Do UAE contractors pay income tax?
No. The UAE has no personal income tax, so contractors keep their full gross earnings. However, if you set up a company and your taxable profit exceeds AED 375,000 per year, you will pay 9% corporate tax on the amount above that threshold. Freelancers on a personal freelance permit are generally not subject to corporate tax.
What costs should a contractor budget for?
Typical costs include a freelance or company visa (AED 7,500 to AED 25,000 per year), health insurance (AED 3,000 to AED 12,000 per year), office or co-working space if required by your licence, accounting fees, and any professional indemnity insurance. You should also set aside money for months when you have no work.
How is a contractor different from an employee in the UAE?
An employee receives end-of-service gratuity, annual leave, sick pay, and other benefits under UAE Labour Law. A contractor does not get any of these. However, contractors typically charge higher rates to cover the cost of their own benefits, insurance, and downtime between contracts.
Do contractors need to register for VAT?
If your taxable supplies (the total value of your services) exceed AED 375,000 in a 12-month period, you must register for VAT with the FTA (Federal Tax Authority). Voluntary registration is available if your supplies or expenses exceed AED 187,500. Once registered, you charge 5% VAT on your invoices and file quarterly returns.
What should a contractor invoice include?
Your invoice should include your name or company name, trade licence number, TRN (Tax Registration Number) if VAT-registered, the client's details, a description of services, the amount in AED, any VAT charged at 5%, and payment terms. Keep copies of all invoices for at least 5 years as required by the FTA.
Can I work as a contractor on a visit visa?
No. Working in the UAE without a valid work permit or freelance visa is illegal and carries heavy fines. You need a proper freelance permit, an employment visa sponsored by a free zone entity, or a mainland licence. Some free zones like Dubai South and Ajman Free Zone offer affordable options starting from around AED 7,500 per year.
FTA-Aligned: Based on 2025 FTA rates and regulations. For personal advice, speak to a qualified tax consultant.
Disclaimer: This calculator provides estimates based on current UAE Federal Tax Authority rates and MOHRE labour law provisions. It does not constitute professional tax, financial, or legal advice. Your actual entitlements may differ depending on your individual circumstances, employment contract, and applicable free zone regulations. Always consult a qualified adviser before making financial decisions. Read our terms
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