Introduction to Payroll in Oman
Accurate, on-time payroll is critical for any organization, but it becomes especially complex when employees are based in different countries. In addition, Oman's shifting tax laws and regulations make compliance a challenge for any business owner. So, it's important to partner with a professional payroll provider who can stay up-to-date on the latest changes. Our payroll solutions for businesses with employees in Oman are designed to help you meet your compliance obligations, along with providing your employees with the accurate pay and benefits they deserve.
Our local experts are up-to-date on the latest changes to Oman's payroll laws and regulations. We can help you set up a compliant payroll solution for your business in terms of the following:
- Income, corporate, and social security taxes in Oman
- Compensation for sick leave, vacation, and other types of leave
- Calculation of final pay and severance pay
- Other Oman payroll considerations
Skuad can help you navigate Oman's payroll laws and regulations, and we'll work with you to develop a compliant payroll solution for your business. Contact us today to learn more about our services.
Standardizing the payroll process is critical for any business, but it can be especially challenging when employees are based in different countries. This ensures efficient collaboration between other teams, and that all employees are paid accurately and on time.
To make things easier, we've divided the entire process into three stages:
Setting up the organization
Before each payroll cycle begins, you need to set up the organization and collect payroll input. This includes understanding payroll requirements and compliance in your country and collecting employee information like hours worked, leave taken, and any other relevant data. It's essential to set up a system and have clarification on the following:
Business profile: Ensure your business has a valid registration in Oman, and this number is associated with relevant payroll documents such as payslips.
Work location: The location of work can impact withholding tax rates as well as social security contributions. If you have multiple offices across Oman, ensure you have a policy for each office.
Leave policy: Employees are entitled to paid leave in different situations, such as annual leave, sick leave, and maternity/paternity leave. Therefore, it's important to have a clear policy so that employees know their entitlements, and employers can plan for absences accordingly.
Attendance policy: Employees need to track their work hours in order to be paid accurately. There are various methods of doing this, such as paper timesheets or electronic time tracking systems. It's essential to define an attendance policy so that employees know how their work hours will be tracked and paid.
Statutory components: It's essential to comply with Oman's Wage Protection System which safeguards employee salaries. This includes specifying the minimum wage, overtime rates, leave entitlements, and other conditions of employment. This legislation applies to all employed registered with the Ministry of Manpower (MoM).
Salary components: Remember to design salary components that accommodate your employees' diverse needs in Oman. Choose appropriate reimbursements, deductions, and allowances that suit your business while complying with the law.
Pay schedule: You need to decide how often you will run payroll and make payments to employees. In Oman, the payroll cycle often runs monthly, and employers must make payments at least once a month. Inform your employees of the payment schedule in advance to budget accordingly.
Employee information: Accumulate all relevant employee information, such as designation, salary, and contact details. Employers will use this to generate employee records and payslips.
Payroll calculation phase
Every organization's payroll is different, based on the company's specific needs and compliance requirements. Once you have all the necessary information, you can feed it into a payroll software or calculator to generate your employees' paychecks. After accounting for all relevant deductions and allowances, this phase generates the actual salaries.
After each payroll cycle is complete, you need to take care of some administrative tasks. This includes issuing payslips, making tax filings, and keeping employee records up to date. It also involves distributing salaries through salary payments or direct deposit.
Salary payments: Paying employee salaries is the most important part of the payroll process. Oman allows online payslips and direct deposit, so choose the most convenient method for your business.
Payroll accounting: Salaries are a massive expense for any business. So, it's important to keep track of payroll expenditure. This data can be used to inform future budgeting and strategic decisions. Employers must archive payroll reports for at least 10 years. This ensures compliance in the event of an audit and allows businesses to track their progress over time.
Payroll reporting and compliance: Oman's taxation system makes deductions for social security contributions. Of an employee's wages, 7% are contributed to this program, and 1% is contributed to a Job Security Fund. There are no sales or payroll taxes in Oman, and foreign nationals aren't subject to these social security payments.
Outsourcing your payroll to Skuad is a hassle-free way to ensure compliance and avoid penalties. We are experts in payroll and can help you navigate the complexities of Oman's wage protection system.
Payroll Processing in Oman
Omani Labor Law and the Sultanate's commitment to the International Labour Organization (ILO) conventions stipulate that employers in Oman must ensure timely and accurate salary payments to their employees. The law also requires that payroll be processed in compliance with the local legislation, which includes the calculation of statutory deductions such as social security contributions. Businesses operating in Oman must understand the local payroll process and compliance requirements to avoid any penalties.
Skuad can simplify payroll processing and ensure that your employees are paid without any hindrances.
Payroll Processing Company in Oman
Outsourcing your payroll to Skuad can help you stay compliant while freeing up time and resources to focus on other aspects of your business. Get in touch with us today to learn more about our payroll services in Oman.
Payroll Management in Oman
Payroll management is managing employee salaries, wages, and other related payments. It involves recording, calculating, and timely disbursement of employee salaries along with tax payments, social security contributions, and other deductions.
Payroll Compliance in Oman
Adhering to the local legislation is critical for businesses operating in Oman. The law requires that payroll be processed in compliance with the local regulations, including calculating statutory deductions such as social security contributions. Statutory compliance may vary according to the industry and size of the organization. For instance, Per Article 83, Part 5 of the Labor Law of Oman, women working in the private sector are entitled to 50 days of maternity leave with full pay.
Looking to start payroll management in Oman? Book a demo with Skuad to understand exactly what’s expected of your business.
Several components need to be considered when processing payroll.
Compensation: The minimum wage in Oman is 325 OMR per month, of which 225 OMR must be salary, and the remaining 100 OMR must be paid as a bonus.
Working hours: The standard work week in Oman comprises 45 hours every week, nine hours a day. In Ramadan, work hours are reduced to 6 hours a day, totalling 30 hours a week.
Overtime laws: All work above the standard 45 hours a week is considered overtime. Employees are paid 125% of their hourly wage during daylight hours and 150% for work at night.
Social security: Social security contributions amount to 7% of an employee's wages, which is deducted from their salary. The employer also contributes 1% to a Job Security Fund.
Sick leave: Employees in Oman are entitled to 10 days of paid sick leave per year. Sick leaves beyond two weeks are paid at a reduced rate.
- Week 3-4 of sickness – 75% of wages
- Week 5-6 of sickness – 50% of wages
- Week 7-10 of sickness– 25% of wages
Public holidays: Here's a list of the public holidays in Oman.
- 1 Jan - New Year
- 1 March - The Prophet's Ascension
- 3 May - Eid Al Fitr
- 10 July - Eid Al Adha
- 23 July - Renaissance Day
- 31 July - Islamic New Year
- 9 October - The Prophet's Birthday
- 18 November - Oman National Day
Payroll taxes: Oman doesn't have personal income tax. The VAT in Oman is 5.00%.
Other laws: The Employment Agreement and the Collective Agreement dictate termination procedures and other important employment-related issues in Oman.
Payroll processing can be a complicated and time-consuming task, especially when you're trying to stay compliant with the local legislation. Therefore, businesses in Oman have multiple payroll options available to them, for instance, managing internally, remotely, collaborating with a global employer organization, or outsourcing to a payroll processing company like Skuad.
While each option has its own advantages and disadvantages, outsourcing payroll can be the most efficient and cost-effective solution for businesses of all sizes. Skuad offers a comprehensive payroll solution that includes compliance with the latest local legislation, tax calculation, direct deposit, etc. Get in touch with us today to learn more about our services.