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Contractor guide
Gulf contract jobs are offered through an agency payroll that sponsors your visa, to contractors with their own freelance permit or visa, or to contractors with their own company. The choice changes who sponsors your visa, who pays you and what your monthly rate should cover. Here is what each one means.
| Agency payroll (outsourcing) | Freelance permit or own visa | Own company | |
|---|---|---|---|
| Who sponsors your visa | The agency or outsourcing company | You, through a freelance permit, or another visa you already hold | Your company, as its owner or employee |
| Who pays you | The agency, every month, through the UAE Wage Protection System (WPS) | The client or agency pays your invoices | The client pays your company's invoices |
| Contract | Fixed term employment contract with the agency | Service agreement | Service agreement between companies |
| Medical insurance | Provided by the agency as your sponsor | Arranged and paid by you | Arranged by your company |
| End of service gratuity | Due to employees under labour law, often built into the agency's margin | Not applicable | Only if your company employs you |
| Tax and VAT | Nothing to file in the UAE | VAT registration once your taxable supplies pass AED 375,000 a year, and possible corporate tax | Corporate tax and VAT rules apply to the company |
Most Gulf contracts are filled through an agency payroll. The recruitment or outsourcing company becomes your employer and visa sponsor for the length of the assignment, pays you every month and provides medical insurance, while you work at the client's office or site. It is the simplest route and the only realistic one in many cases, especially in Saudi Arabia and Qatar.
In the UAE you can also hold your own residence visa: through a freelance permit from a free zone or a government authority, a golden visa, or a family sponsorship that allows you to work. You then invoice the client or the agency directly. Clients like this route because there is no visa to arrange, but you pay for your own permit, visa, insurance and gaps between contracts.
Experienced contractors sometimes set up a company in a free zone or on the mainland. The company signs the contract, invoices the client and sponsors your visa. It brings more admin and yearly licence costs, and corporate tax and VAT rules apply to the company.
This guide gives general information, not legal, immigration or tax advice. Rules change and differ between emirates, free zones and countries: check your situation with the issuing authority or a qualified adviser.
Convert a package into a monthly rateWhat is a freelance permit in the UAE?
A freelance permit (or freelance licence) is issued by some free zones and government authorities and lets you work for several clients under your own name. It usually comes with a residence visa sponsored through the permit. Conditions, costs and the activities allowed differ between issuers, so check them before you apply.
Can I work in the UAE on a visit visa?
No. Working requires a work permit or a residence visa that allows it. Clients and agencies are required to check your status before you start, so plan the visa before the contract start date.
What is the difference between payroll and outsourcing contracts?
They usually mean the same thing in the Gulf: the agency employs you, sponsors your visa and pays your salary for the length of the assignment, while you work at the client. The agency charges the client a monthly rate that covers your salary, visa, insurance and its margin.
Do contractors pay income tax in the UAE?
There is no personal income tax on salaries in the UAE. A freelancer or company that runs a business may have to register for VAT once taxable supplies pass AED 375,000 a year, and UAE corporate tax can apply to business income, including for individuals whose business turnover passes AED 1 million a year. Your home country may still tax you depending on your residence.
How does it work in Saudi Arabia and Qatar?
Foreign contractors in Saudi Arabia and Qatar normally work under the sponsorship of an outsourcing company, a consultancy or the client, which holds the residence permit (iqama in Saudi Arabia). Self sponsored freelance routes for foreigners are limited in both countries, so most contracts go through an agency payroll.
