As the UAE moves toward its long-term economic vision, Emiratisation has become a central pillar of national policy.
At the heart of this initiative lies NAFIS, a government-led program overseen by the UAE Ministry of Economy and the Ministry of Human Resources & Emiratisation (MOHRE).
While NAFIS was once viewed as a concern mainly for large local employers, policy developments leading into 2026 make it increasingly relevant for foreign-owned and multinational companies operating in the UAE—including Free Zone entities.
This article explains:
✔ What NAFIS is
✔ Key policy changes expected in 2026
✔ How foreign companies will be affected
✔ Practical strategies to stay compliant and competitive
1. What Is NAFIS? (Overview for Foreign Businesses)
NAFIS is the UAE government’s national program designed to increase the participation of Emirati nationals in the private sector.
It goes beyond incentives and includes:
- Mandatory Emiratisation targets (for applicable companies)
- Government wage support and training subsidies
- Penalties and compliance monitoring
Core Objectives
- Reduce reliance on foreign labor
- Increase Emirati employment in private enterprises
- Strengthen long-term economic sustainability
2. Key NAFIS Policy Changes Heading into 2026
1) Expansion of Applicable Company Scope
By 2026, regulatory oversight is expected to extend beyond traditional targets.
Companies under closer scrutiny include:
- Mainland companies (already subject to Emiratisation rules)
- Larger Free Zone entities with significant operations
- Foreign-owned companies with:
-
- UAE-based revenue
- Physical offices
- Growing local workforce
The assumption that “Free Zone companies are fully exempt” is becoming less reliable.
2) More Sophisticated Emiratisation Assessment
Instead of simple headcount compliance, authorities are shifting to qualitative evaluation, including:
- Job relevance and role legitimacy
- Salary level and market alignment
- Employment duration and retention
- Actual contribution to business operations
Nominal or “paper employment” arrangements are increasingly subject to enforcement action.
3) Real Financial Penalties and Operational Consequences
From 2026, non-compliance with Emiratisation requirements may result in:
- Accumulating annual fines
- Restrictions on government portals and services
- Delays or complications in visa issuance and license renewal
NAFIS is no longer a theoretical risk—it is becoming an operational and financial issue.
3. Direct Impact on Foreign Company Operations
1) Rising Employment Costs
- Emirati employees typically command higher salaries
- While NAFIS subsidies exist, long-term HR costs will increase
- Budget planning must reflect this structural change
2) HR Strategy Must Evolve
- Short-term staffing models are no longer sufficient
- Companies need medium- to long-term workforce planning
- Roles must be designed to deliver real business value
3) Increased Legal & HR Risk
- Emirati employment contracts are legally sensitive
- Termination, performance reviews, and restructuring require careful handling
- Dispute risk is higher than with standard expatriate employment
4. Are Free Zone Companies Really Unaffected? (2026 Reality Check)
Traditional View
- “Emiratisation does not apply to Free Zones.”
Practical Reality in 2026
- While Free Zones are not uniformly subject to mandatory quotas, indirect exposure is increasing.
Free Zone companies are more likely to be impacted if they:
- Serve UAE Mainland clients directly
- Hold Dual Licenses
- Employ more than 10 staff
- Generate substantial UAE-sourced revenue
Emiratisation compliance may influence banking, visa approvals, and license renewals, even for Free Zone entities.
5. Impact on Visas and License Renewals
Visa Issuance
- Emiratisation status may be reviewed during new employment visa applications
- Authorities may request explanations for workforce composition
License Renewal
- Repeated non-compliance can lead to:
-
- Renewal delays
- Conditional approvals
- Increased scrutiny from authorities
Professional License holders in the Mainland should be particularly cautious.
6. Practical Compliance Strategies for Foreign Companies (2026)
Strategy 1: Avoid Cosmetic Compliance
- Nominal hiring arrangements are high-risk
- Authorities increasingly detect non-genuine employment
Strategy 2: Align Business Scale with Workforce Structure
- Early-stage or offshore-focused businesses may retain Free Zone structures
- UAE-revenue-driven businesses should plan Emiratisation early
Strategy 3: Integrate HR, Payroll, and Compliance
- Emirati salaries, subsidies, WPS, and tax reporting must be aligned
- Fragmented HR management increases regulatory exposure
7. Premia TNC’s Outlook on NAFIS Beyond 2026
Premia TNC views NAFIS as evolving from a hiring policy into a localisation benchmark.
In practice, NAFIS will increasingly answer one key question for regulators:
“Is this foreign company genuinely committed to building a long-term presence in the UAE?”
NAFIS is becoming a signal of operational seriousness, not merely a compliance obligation.
Conclusion: NAFIS Is Now a Core Business Consideration
For foreign companies operating in the UAE, NAFIS in 2026 is no longer just an HR issue.
It directly affects:
✔ Cost structure
✔ Workforce planning
✔ Visa and licensing stability
✔ Long-term business sustainability
Companies that proactively integrate Emiratisation into their operating model will enjoy greater regulatory certainty and business continuity.