Oman’s Labor Law is stipulated by the Royal Decree 35/2003, and is issued by the Sultanate of Oman regarding all laws pertaining to Labor and employment-related issues. Employment laws in Oman and any amendments are implemented through royal decrees and ministerial decisions, which reflects the constantly changing nature of laws governing employees and employers in Oman. For most types of workers Omani or non-Omani, the Omani Labor Law applies to all except for civil servants, military or domestic service employees.
Complying with local payroll and tax requirements is essential for a company doing business in Oman. Issues such as tax rates and withholding and social security are all essential in ensuring a seamless human resources operation. Many companies will consider outsourcing these administrative tasks to a GEO (Global Employment Organization).
The procedure for sponsoring a foreign worker to work in an Omani company rests mostly on the employer, who must obtain several documents if they are to remain an employee for an extended duration. The employer must acquire an employment visa for entry into Oman, a resident card to remain in the country and a residence permit. In Oman, all these documents apply to employees who are between the age of 21 and 60 who have received a job offer from an Omani company. The employer becomes the visa sponsor and will usually obtain the necessary visas and permits from the Ministry of Manpower.
The Sultanate of Oman has made significant progress towards economic growth and prosperity in the last 40 years, which makes Oman an increasingly favorable location for business investment. There has been a shift towards liberalizing the Foreign Business and Investment Law, allowing up to 70% of foreign equity ownership, and up to 100% for vital development projects to Oman.
Commercial entities should register with the Ministry of Commerce and Industry and the Chamber of Commerce and License of the municipality of incorporation before beginning business. Foreign companies and individual investors may establish operation in Oman through several main forms:
Companies entering Oman must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Omanese Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have an Omanese entity established that can run payroll.
A DIY approach will typically be delayed until there is a properly incorporated company ready to run payroll and may be a costly option. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.
|Management Fee for Employer of Record Services / Monthly Payroll Costs||
Please contact us for a quote
Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.
|Tax Returns Supplied||
|Employers Social Security and statutory contributions||
Companies are required to pay 11.5% of the employee’s gross salary as social security contributions including a 1% payment for work related injuries. The withholding obligation lies with the employer.
The social security system of Oman is under a unified system of insurance protection coverage for Gulf Cooperation Council (GCC) members that cover workers in all GCC countries.
|Employees Social Security and statutory contributions||
Employees who are Omani nationals are subject to social security contributions, levied at 18.5% of the employee’s gross salary. Only 7% of this contribution is payable by the employee.
Employees who are foreign nationals are not subject to social security payments.
|Corporate Income Tax Rate||
Corporate taxation in Oman does not define residency as the determinant of corporate taxes. If a foreign company has provided services in Oman for 90 days or more in a 12 month period, or has a dependent agent in Oman, it is considered a permanent establishment and is subject to corporate taxation for the Oman-source income.
Corporate Income Tax is 12% applying to all businesses, branches and permanent establishments of any foreign company with taxable income exceeding OMR 30,000. Exclusions apply to petroleum industries.
There is no payroll tax in Oman.
There is no sales tax in Oman.
Oman does not levy withholding taxes on dividends or interest.
There is a 10% withholding tax applied at source to payments for royalties and management fees. This tax applies to companies without a permanent establishment in Oman.
Customs Duty: A customs duty of 5% of cost, insurance and freight value applies to most non-GCC source goods.
Stamp Duty: A stamp duty of 3% applies to the transfer of land and property.
Municipal Taxes: Local taxes are levied for certain activities like hotel income, property rents and leisure income.