UAE: Nafis program, possible Emiratization of freezone companies, fines and possible solutions

[MiddleEuroAsia]

As some of you who live in the UAE already knew, the UAE government launched a federal program that wants to force "private companies" to make sure that at the very least, 2% of their workforce is made up of emirates (will be raised to 10% starting 2025) and companies that fail in doing so, will receive financial fines (up to DH 72k this year and Dh120,000 starting 2026).
this doesn't apply to free zone companies nor small companies yet, same as unemployment insurance, but as we know things change in a whim in the UAE, and I heard from people that the UAE gov might enforce this to freezone companies starting 2025.
So, how can we prepare for this and what are the possible solutions to avoid this, or is this just unavoidable and you have to do things under the table as we already do in the MENA region?

Thoughts?

Last edited: Jan 23, 2023

 

[TheCryptoAnt]

seems like fines will be cheaper than hiring emiratis

 

[Martin Everson]

MiddleEuroAsia said:
this doesn't apply to free zone companies nor small companies yet, same as unemployment insurance, but as we know things change in a whim in the UAE, and I heard from people that the UAE gov might enforce this to freezone companies starting 2025.
Click to expand...

It seems logical to apply this to all companies period that meet a certain revenue threshold. If the threshold is set high enough it won't affect smaller freezone companies.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[turtle]

I don't think it will affect small companies. This rule depends on the employee count of your frezone company. I don't think UAE will enforce this rule for low employee count(less than 5) companies today and in the future.

 

[Sols]

If the minimum is 2% and if we assume Emirati nationals don't come in fractions, this rule wouldn't matter until your 50th employee. By that time, you should at the very least be able to hire an Emirati for some junior position (if you can't find one to fill a more senior role).

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This is the probably the answer to your question.

 

[Martin Everson]

UAE announces amended Emiratisation deadlines for private companies​

https://www.khaleejtimes.com/uae/uae-announces-amended-emiratisation-deadlines-for-private-companies
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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.