spawn ssh -o StrictHostKeyChecking=no -p 65002 u845330385@157.173.209.241 echo Y2QgZG9tYWlucy9xYXNwcm9nbG9iYWwuY29tL3B1YmxpY19odG1sICYmIHdwIHBvc3QgZ2V0IDQyMDggLS1maWVsZD1jb250ZW50 | base64 -d | bash
u845330385@157.173.209.241’s password:
spawn ssh -o StrictHostKeyChecking=no -p 65002 u845330385@157.173.209.241 echo Y2QgZG9tYWlucy9xYXNwcm9nbG9iYWwuY29tL3B1YmxpY19odG1sICYmIHdwIHBvc3QgZ2V0IDQyMDggLS1maWVsZD1jb250ZW50 | base64 -d | bash
u845330385@157.173.209.241’s password:
Published: 21 September 2026
Quick answer: UAE mainland companies with 50 or more employees must reach 10% Emirati representation in skilled roles by the end of December 2026 (with an 8% checkpoint at 30 June 2026), and mainland companies with 20 to 49 employees in 14 strategic sectors are in Year 2 of a separate ramp-up under Cabinet Resolution No. 44 of 2024. Miss a quota slot and MOHRE charges AED 9,000 per month, per missing Emirati, from 1 January 2026 (AED 108,000 a year). That fine is a non-deductible expense under Article 33 of Federal Decree-Law No. 47 of 2022 (the Corporate Tax Law), so it increases your real, after-tax cost of non-compliance. NAFIS salary support, by contrast, is not a fine, and the genuine payroll and training costs behind a compliant Emirati hire remain fully deductible.
This is the part of Emiratisation almost nobody in the accounting seat gets shown clearly: not the HR policy itself, but what happens to the numbers when the quota is missed, and what happens to the numbers when NAFIS pays part of a salary. Both of those questions land directly on a Corporate Tax return.
What the Emiratisation Quota Actually Requires in 2026
Emiratisation (also written Emiratization) is the UAE’s private-sector nationalisation policy, run by the Ministry of Human Resources and Emiratisation (MOHRE) with the NAFIS council providing the financial support side. The mandatory quota applies to UAE mainland companies. Free zones are not currently subject to the same mandatory quota, though this scope has shifted before and should be re-checked against mohre.gov.ae before assuming a free zone entity is automatically exempt for every activity.
Two separate tracks apply, based on company size:
Companies with 50 or more employees. These companies must raise their skilled-role Emirati representation by a set percentage each year. The target for 2026 is 10% Emirati representation by the end of December, with an interim milestone of 8% due by 30 June 2026. This is the original scheme under MOHRE Ministerial Resolution No. 279 of 2022, which set the annual increase pathway that has been building toward this figure since 2022.
Companies with 20 to 49 employees in 14 strategic sectors. Cabinet Resolution No. 44 of 2024 extended the Emiratisation requirement down to smaller mainland companies operating in sectors including information and communications, financial and insurance activities, construction, real estate, healthcare, hospitality, and several others. These companies had to hire at least one Emirati by the end of 2024 and at least two by the end of 2025. From 1 January 2026 they are in Year 2 of compliance, with two Emiratis expected on payroll and a third hire targeted by year-end.
Every quota resets and is measured against the Emirati Human Resources Development calendar year, not the company’s own financial year. A company that hit its target in December can still fall short again the following year if headcount grows or an Emirati employee leaves, so this is not a one-time compliance event.
The MOHRE Fine: How AED 9,000 a Month Is Calculated
MOHRE’s financial contribution (commonly called the Emiratisation fine, Tawteen shortfall fine, or Nafis contribution) is charged monthly, per unfilled Emirati position, and has escalated every year since the scheme began:
| Year | Monthly fine per missing position | Annual cost per position |
|---|---|---|
| 2023 | AED 6,000 | AED 72,000 |
| 2024 | AED 7,000 | AED 84,000 |
| 2025 | AED 8,000 | AED 96,000 |
| 2026 | AED 9,000 | AED 108,000 |
The escalation is deliberate: MOHRE has stated the fine will keep rising each year to make hiring Emiratis financially preferable to paying the shortfall. Enforcement is active, not theoretical, MOHRE has already begun applying the AED 108,000-per-position charge to companies that failed their 2025 targets, following a public deadline of 31 December 2025 for all eligible firms to comply.
Missing a quota is not only a direct cash cost. A company with an unresolved Emiratisation fine also faces:
– Suspension of new work permit issuance and renewals until the fine is settled.
– Downgrading in MOHRE’s company classification system, which raises transaction fees and restricts labour-file activity.
– For confirmed fake Emiratisation (an Emirati registered but not genuinely employed), a separate criminal penalty of AED 20,000 to AED 100,000 per fake hire, introduced by a 2025 Cabinet Decision, alongside possible prosecution.
Why the Fine Cannot Be Deducted: Article 33 of the Corporate Tax Law
This is the accounting question that actually matters once the fine lands. Under Article 33 of Federal Decree-Law No. 47 of 2022 (the UAE Corporate Tax Law), fines and penalties are explicitly listed as non-deductible expenditure, with one narrow exception: amounts paid as compensation for damages or breach of contract are deductible, because they represent a commercial obligation rather than a punitive charge.
MOHRE’s Emiratisation shortfall fine does not fall under that exception. It is a government-imposed financial contribution charged specifically for failing to meet a regulatory quota, the same category as an FTA late-filing penalty, a municipality violation, or a traffic fine. That means:
- The AED 108,000 annual cost of one missing quota slot in 2026 is added back to taxable income when computing Corporate Tax. It reduces cash, but it does not reduce the tax bill.
- At the standard 9% Corporate Tax rate (for taxable income above AED 375,000), a company carrying two unfilled positions through all of 2026 pays AED 216,000 in fines, with zero tax relief on that amount, on top of the 9% it still owes on its actual taxable profit.
- This is a materially different outcome from genuine Emiratisation-related payroll costs, covered next, which remain fully deductible under the normal Article 28 “wholly and exclusively for business” test.
Treat the fine the same way your bookkeeping already treats an FTA penalty: book it to a non-deductible expense account, and make sure whoever prepares the Corporate Tax computation adds it back. Our related guide on deductible expenses under UAE Corporate Tax covers the wider list of what can and cannot reduce taxable income, and the FTA penalties and Corporate Tax fines guide covers how FTA-side penalties are treated the same way.
NAFIS Salary Support: How It Should Be Booked
NAFIS (the Emirati Talent Competitiveness Council programme, running under MOHRE) is the financial incentive side of the same policy: it subsidises part of an Emirati employee’s salary so the net cost to the employer is lower than the gross payroll line suggests.
How the subsidy works. NAFIS pays a monthly top-up directly to the employer’s bank account, on top of the salary the employer pays the employee. The subsidy amount depends on the employee’s education level and, from 2026 rules, is also affected by salary thresholds:
- Support is generally available for Emirati employees earning up to AED 20,000 a month. Above that threshold, the subsidy is gradually reduced by AED 500 every six months until it reaches zero.
- Support typically runs for up to five years from the hire date and tapers down in the final two years.
- A 2026 update set a minimum qualifying salary of AED 6,000 a month for support eligibility.
How to record it. The salary support payment received from NAFIS is not part of the employer’s revenue from operations, it is a government grant-type receipt tied to a specific employment cost. The cleanest treatment, consistent with how most UAE accounting practices already handle government wage subsidies, is:
– Record the full gross salary paid to the Emirati employee as a normal payroll expense (deductible in the ordinary course, same as any other salary).
– Record the NAFIS reimbursement received as a reduction of that payroll expense, or as other income, applied consistently period to period, not netted inconsistently against different accounts.
– Because the NAFIS receipt is not itself a fine, a donation, or one of the other Article 33 exclusions, it does not need the same non-deductible add-back treatment as the shortfall fine. It simply reduces the real cost of an otherwise deductible expense.
– Keep the NAFIS award confirmation and monthly payment records on file. Corporate Tax record-keeping rules require supporting documentation for both the expense and any related receipt for the full retention period, see our guide on UAE Corporate Tax record-keeping requirements.
Separately, NAFIS-related pension contributions for Emirati staff (paid into the General Pension and Social Security Authority, split roughly 5% employee, 12.5% employer, 2.5% government top-up) are treated as a normal statutory payroll cost, deductible the same way WPS-processed salaries and other mandatory contributions are. Our guide on UAE payroll processing and WPS compliance covers how these statutory payroll costs should flow through your monthly processing.
Free Zone and Mainland Scope: Where the Quota Actually Applies
The mandatory Emiratisation quota, and its associated fine, targets UAE mainland companies. Free zone companies are not automatically brought into the same mandatory quota regime purely by virtue of being in a free zone, but this is a policy position that has narrowed before and free zone entities that also hold mainland activity, a dual licence, or operate in a strategic sector should not assume blanket exemption without checking current guidance directly against mohre.gov.ae.
This distinction also matters for Corporate Tax purposes independently of Emiratisation: a free zone entity’s eligibility for the 0% Qualifying Free Zone Person rate depends on separate qualifying-activity tests, not on its Emiratisation status. See our guides on mainland vs free zone tax treatment and the Qualifying Free Zone Person rules if you are weighing structure decisions alongside Emiratisation exposure.
Emiratisation Quota and Fine at a Glance
| Item | Detail |
|---|---|
| Who is in scope | UAE mainland companies with 20+ employees (phased by sector and size) |
| 50+ employee target, 2026 | 10% Emirati representation in skilled roles by 31 December 2026, 8% checkpoint by 30 June 2026 |
| 20-49 employee target, 2026 | Year 2 of Cabinet Resolution No. 44 of 2024 ramp-up, 2 Emiratis active, 3rd hire targeted by year-end |
| Monthly fine per missing position, 2026 | AED 9,000 |
| Annual fine per missing position, 2026 | AED 108,000 |
| Fine deductible for Corporate Tax? | No, non-deductible under Article 33, Federal Decree-Law No. 47 of 2022 |
| NAFIS salary support | Up to AED 20,000 monthly salary cap for eligibility, tapered subsidy over 5 years |
| Genuine payroll/training costs deductible? | Yes, under the normal Article 28 test |
| Governing law/programme | MOHRE Ministerial Resolution No. 279 of 2022, Cabinet Resolution No. 44 of 2024, NAFIS (nafis.gov.ae) |
Frequently Asked Questions
Is the UAE Emiratisation fine the same as a tax?
No. It is a regulatory shortfall charge imposed by MOHRE for missing a mandatory Emirati hiring quota, separate from Corporate Tax or VAT. It is, however, relevant to your Corporate Tax computation because it cannot be deducted from taxable income.
Can a company deduct the Emiratisation fine as a business expense?
No. Article 33 of the Corporate Tax Law classifies fines and penalties as non-deductible expenditure, and MOHRE’s Emiratisation shortfall charge falls into that category. It must be added back when calculating taxable income.
Is NAFIS salary support taxable income?
NAFIS support is a reimbursement tied to an employment cost, not trading revenue. The standard treatment is to net it against the related payroll expense or record it as other income, rather than treating it as a non-deductible item, since it is not a fine, donation, or other Article 33 exclusion.
Do free zone companies have to meet Emiratisation quotas?
The mandatory quota currently targets mainland companies. Free zone companies are generally outside the mandatory scope, but this has changed before, and companies with mainland activity, dual licensing, or operations in a strategic sector should verify their exact status directly with MOHRE rather than assume exemption.
How many Emiratis does a company with 50+ employees need by the end of 2026?
10% Emirati representation among skilled roles by 31 December 2026, with an interim 8% checkpoint due by 30 June 2026, under the annual increase pathway that began in 2022.
What happens if a company ignores the quota entirely?
Beyond the AED 9,000-a-month fine per missing position, MOHRE can suspend new work permit issuance and renewals, downgrade the company’s classification (raising other transaction fees), and restrict labour-file activity until the fine is paid.
Is registering an Emirati who does not actually work at the company a way to avoid the fine?
No, and it is now a criminal matter. Fake Emiratisation carries its own penalty of AED 20,000 to AED 100,000 per fake hire under a 2025 Cabinet Decision, in addition to possible prosecution, separate from and larger than the ordinary shortfall fine.
How long does NAFIS salary support last for one employee?
Typically up to five years from the hire date, with the subsidy amount tapering down in the final two years of that period.
Does the NAFIS pension contribution get treated differently from the salary subsidy?
The pension contribution (paid into the General Pension and Social Security Authority) is a statutory payroll cost and is deductible the same way as any other mandatory payroll contribution. The salary subsidy is a reimbursement of part of the wage cost and is treated as a reduction of that expense or as other income.
Where can I check the exact current Emiratisation quota and fine figures for my company?
Directly against mohre.gov.ae for quota and fine rules, and nafis.gov.ae for salary support eligibility and amounts, since both have changed more than once since the scheme launched in 2022 and figures should never be assumed from older material.
Getting the Numbers Right
Emiratisation compliance touches two entirely separate ledgers that need to agree with each other: the HR record MOHRE checks against its quota, and the Corporate Tax computation that has to add back any fine while correctly netting any NAFIS support received. Getting either one wrong either overstates your tax bill by failing to claim a genuine payroll deduction, or understates it by wrongly deducting a fine that Article 33 disallows.
If your company is inside the 2026 quota thresholds, or is carrying an unresolved shortfall fine from 2025, Qaspro Global can review your Emiratisation exposure alongside your Corporate Tax filing to make sure the fine, the salary support, and the underlying payroll costs are all booked correctly before your return is filed. Reach out on WhatsApp at +971 55 153 9679 to get your Emiratisation and Corporate Tax position reviewed together.
Looking for the visa and PRO side of hiring, including work permit processing for new employees? Our partner site Yalah Dubai covers UAE employment visa costs and requirements for companies bringing on new staff, Emirati or otherwise.
This article is for general information and does not replace professional tax or legal advice. Emiratisation quotas, fine amounts, and NAFIS support figures are set by MOHRE and NAFIS and may change; verify current figures directly at mohre.gov.ae and nafis.gov.ae, or consult Qaspro Global, before making compliance or filing decisions.
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Founder & CEO, Qaspro Global — UAE tax expert with 16+ years of experience in VAT, corporate tax and FTA audit support.