Payroll in Oman

Mercans is your trusted partner for premium payroll outsourcing in Oman (Managed & SaaS) services. Our steadfast commitment to delivering exceptional payroll solutions in Oman is unmatched. With extensive experience in payroll in Oman, Mercans guarantees precise and compliant payroll services in Oman, establishing us as the preferred option for businesses of all sizes. Rely on Mercans for prompt and accurate payroll transactions, including the convenience of multi-currency payments tailored for the Omani market. As your dedicated local payroll provider in Oman, we feature a team of in-country payroll specialists equipped with profound knowledge of local regulations, providing comprehensive assistance for a seamless payroll experience customized to meet your business requirements.

Everything you need to know before running payroll in Oman

Payroll Requirements

There are no specific regulations governing payslips or payment frequency in Oman, but typically, payslips are issued to employees on a monthly basis as common practice. Although there are no personal income tax obligations in Oman, it’s crucial to adhere to all labor law requirements, including mandatory regulations such as the Wage Protection System (WPS). The WPS is applicable to employees registered with Oman’s Ministry of Manpower and mandates payment of wages in the local currency through bank transfers to their local bank accounts. Non-compliance with the WPS may result in financial penalties for employers and could lead to difficulties in renewing or processing new visas for their workforce.

Minimum Wages

The minimum wage in Oman has remained steady at 325 OMR per month in both 2023 and 2024. From 2013 to 2024, the average minimum wage in Oman was 325.00 OMR per month. It peaked at 325.00 OMR per month in 2014 and hit a low of 325.00 OMR per month in the same year.

Payroll Cycle

In Oman, payroll cycles typically operate on a monthly basis, requiring employers to make payments at least once a month. At Mercans, we handle the complete payroll cycle for our clients, encompassing tasks such as preparing payroll reports, processing salary payments while ensuring compliance with the Wage Protection System (WPS), managing accruals including Gratuity and pension funds, providing an online portal for accessing payslips, and much more.

13th Month Salary

Employers in Oman are not legally obligated to provide a 13th-month payment.

Working Hours and Overtime Pay

According to Article 68, the standard working hours for a worker are 8 hours per day or 48 hours per week in Oman. Any hours worked beyond 8 hours per day are considered overtime, and the compensation rate is 25% higher than the worker’s regular salary.

Payroll Taxes in Oman

Social Security

Omani nationals employed in Oman are subject to a social security regime, where the current payment rate stands at 18.5% of the employee’s gross remuneration, as detailed in the employment contract provided by Mercans. This rate applies irrespective of free zone tax holidays. Of this total, 7% is contributed by the employee, while the remaining 11.5% (inclusive of a 1% payment for work-related injuries) is covered by the employer. The responsibility for withholding lies with the employer. Expatriates, however, are not required to make social security payments.

Social Security for Oman Nationals

Sample Calculation

• Gross salary  – 4500 OMR
• Maximum Ceiling Amount for Social security contribution is 3000 OMR
• Employee : 3000 OMR * 7% = 210 OMR
• Employer : 3000 OMR * 10.5% = 315 OMR
• Work Injury Employer : 3000 OMR * 1% = 30 OMR
• Unemployment EE – 3000 OMR* 1% = 30 OMR
• Unemployment ER – 3000 OMR * 1% = 30 OMR

Social Security for GCC Nationals

Social Security for Expats

No social security contribution is applicable for Expat employees.

Public Authority for Social Insurance (PASI)

The Public Authority for Social Insurance (PASI) mandates that all private companies operating in Oman and the GCC with Omani employees must register with PASI within one month from the start of employment. This registration process brings Omani employees under the purview of the Social Insurance Law. Typically, the company’s Public Relations officer handles the registration, and once completed, the PASI number remains the same even if the employee changes companies, although the PASI authority must be informed of the change. The registration process requires specific documents, including completed employee registration forms, copies of ID cards or passports, and employee contracts registered by the Ministry of Manpower. Additionally, there are requirements specific to Omani employees, such as providing copies of job contracts, ensuring the employee falls within a certain age range, and presenting valid identification. The maximum salary cap for PASI contributions is 3,000 Omani Rials (OMR) per month per employee, regardless of the actual salary amount. Salaries must be stated in Omani Rials for employees working in Oman and in corresponding currencies for those working in other GCC countries.

Wage Protection System (WPS)

The Wage Protection System (WPS) was introduced jointly by the Ministry of Manpower and the Central Bank of Oman in January 2014. As outlined in Article 53 of the Omani Labor Law, employers are mandated to pay their employees in the local currency through Omani banks. These banks are obligated to report all salary payments to the Ministry of Manpower for comparison with the contractual salaries stated in employees’ contracts. Any deviations from the agreed-upon salary terms, such as late or incomplete payments, must be accompanied by valid justifications from the employer.

A crucial requirement under the WPS is the payment of employees’ wages in the local currency via bank transfers to their local bank accounts. Employers failing to comply with the WPS regulations could face financial penalties and encounter difficulties in renewing or processing new visas for their workforce.

To mitigate the risks associated with non-compliance with WPS regulations in Oman, employers should take the following measures:

• Encourage employees to open local bank accounts.
• Ensure that their Omani corporate banking partner is capable of facilitating salary payments in accordance with WPS regulations.
• Guarantee that all employees receive their full contractual salary in the local currency.

Personal Income Tax

In Oman, there is no Personal Income Tax (PIT). However, individuals engaged in commercial, industrial, or professional activities may be liable to pay income tax. Non-residents, including individuals, may be subject to a withholding tax rate of 10 percent on specified income earned by them, calculated on a gross basis.

Payroll Compliance in Oman

In Oman, employers are obligated to submit the following statutory filings. Mercans assists you in completing the necessary filings as per the Omani local laws.

Statutory Filings

PASI Monthly Contributions

Every month, PASI generates invoices for registered organizations, detailing the number of employees, additions, exclusions, and contribution amounts for both the current and previous months. Payment of these invoices can be made through the PASI online portal.

Annual Contributions for Nationals

Employers are required to ensure that employees’ salaries are equivalent to 3% as of January 1st and update this information on the PASI online portal. Even if there are no changes in salaries, employers must submit this declaration for all employees. The Ministry of Labor mandates that private sector employers provide an annual increment of 3% of the basic salary.

Wage Protection System (WPS)

WPS registration is seamlessly integrated with licensed banks and financial institutions. To comply with the WPS system, companies must ensure that all employees have bank accounts and that salaries are paid through licensed banks or financial institutions. Typically, salary upload files include the company’s CR number and the bank account number linked to the company’s CR number and registered address. This integration allows the WPS system to monitor salary payments made by the company.

Leave Entitlements

Below is a summary of statutory leaves applicable in Oman:

Company Setup in Oman

Company Registration Process in Oman:

• Name Reservation: Apply to the Ministry of Commerce and Industry (MCI) to reserve a unique company name, adhering to Omani Law’s naming norms.
• Submission of Incorporation Documents: Draft shareholder documents, constitutive contract, obtain authorized signatory form, and bank certificate, then submit to the MCI.
• Registration with Oman Chamber of Commerce and Industry (OCCI): Register with the OCCI after MCI registration to comply with commercial regulations.
• Government Approvals: Depending on the business nature, obtain approvals from various government departments, including tax registration, Royal Oman Police, Ministry of Manpower for labor clearances and visas, municipality license, and import/export license.
• Company Seal Design: Design and obtain a company seal.

Required Documents for Omani Company Registration:

• Company registration form
• Copy of valid ID of shareholders and authorized signatories
• Approved authorized signatory form
• Company statutes
• Chamber of Commerce and Industry Affiliation certificate
• Certificate of initial capital deposit at bank

Legal and Regulatory Framework

Oman’s legal system is based on civil code principles and Islamic Shari’a Law. The Basic Law emphasizes Islam as the state religion and Shari’a as the basis of legislation, with family law and inheritance governed by Shari’a. The Commercial Court handles commercial disputes, with judges interpreting agreements to reflect original intentions.

Establishment of Business

Foreign companies can establish operations in Oman through various forms, including Limited Liability Company (LLC), Joint stock company, Branch, Commercial Agency, and Commercial Representative Office. Each form has specific requirements and minimum share capital, with certain exemptions and regulations based on agreements and laws.

Free Zones

Oman has three free zones (Sohar, Salalah, Al Mazunah) and a special economic zone in Duqm, each offering incentives like customs duty exemptions, tax exemptions, and relaxed Omanization rates. Businesses can operate freely within the free zones, with benefits like tax exemptions for up to 25-30 years and full foreign ownership permitted.

Benefits of Payroll Outsourcing in Oman

For our Payroll services in Oman, we have implemented a robust tool designed to operate seamlessly across diverse countries, ensuring consistency and meeting our clients’ specific needs. This tool reflects our commitment to:

Enhanced Security Measures

• Incorporating industry-leading security measures to protect sensitive data.
• Holding certifications such as ISO 27001, SOC, and GDPR compliance, ensuring strict adherence to information security protocols.

Consistent and Reliable Performance

• Ensuring sustainable performance to meet the dynamic demands of payroll services.

Flexibility and Scalability

• Providing flexibility and scalability to accommodate evolving client needs and adapt to changing business environments.

Collaborative Cloud Platform

• Utilizing a Cloud-based platform to facilitate collaborative work, promoting efficiency and accessibility across teams.

Key Features of Electronic Payroll Support:

Full Traceability

• Enabling a traceable process from generation to transmission and validation.
• Each step is meticulously validated by our expert team to ensure consistency.

Efficiency in Human Resources

• Streamlining the payroll settlement process to enhance the efficiency of the human resources area.
• Significant time savings achieved through optimized electronic payroll support.

Certified Suppliers

• Partnering with certified suppliers holding ISO 27001 certification, ensuring the highest standards of information security.
• Secure data transmission processes facilitated through these suppliers, bolstering the integrity of our services.

Mercans ensures clients in Oman benefit from top-tier information security standards, adhering to ISO 27001, SOC, GDPR, and OWASP guidelines. This commitment underscores our dedication to maintaining the highest standards of information security and operational integrity, providing robust protection against cyber threats.

Payroll Solutions in Oman

Discover the seamless payroll processing potential in Oman with Mercans’ Global Payroll Solutions. Our adaptable models guarantee local compliance, facilitate multi-currency transactions, and integrate seamlessly with global Human Capital Management (HCM) and Enterprise Resource Planning (ERP) systems. Ensuring accurate payments has never been simpler.

Explore Our Versatile Models:

• SaaS (Software as a Service): Customized for enterprise-level businesses managing multi-country payroll with intricate complexities, such as diverse data points, locations, currencies, and languages. Our SaaS model optimizes operations for maximum efficiency.
• Managed Services: Tailored for mid-sized and large enterprise businesses, our Managed Services model addresses the needs of those handling multi-country payroll. It offers on-demand HR expertise, ensuring security, reliability, and compliance throughout.
• HRMS (Human Resource Management System): Ideal for mid to large businesses expanding their operations, our HRMS model provides a comprehensive suite of functionalities, including payroll and benefits management. Clients can select specific features, ensuring a personalized and efficient solution.

Streamline Payroll with Mercans’ Technology and Integrations

Mercans leads the way in delivering outstanding payroll services in Oman, providing a diverse range of tailored solutions to meet our clients’ unique needs. Choose Mercans as your reliable partner, ensuring a smooth and effective payroll process in Oman’s dynamic business environment.

• Innovative Technology: Experience the forefront of innovation with Mercans’ state-of-the-art technology powering our global payroll solutions. Explore our technological advancements here.
• Seamless Integrations: Effortlessly integrate your Human Capital Management (HCM) systems with Mercans’ solutions, enhancing efficiency and connectivity. Discover the benefits of integration here.
• Recognition: Partner with an organization recognized for excellence. Mercans has received accolades for its dedication to delivering exceptional payroll services. Explore our awards and recognitions here..