Payroll taxes in Oman that are of key importance to employers include social security contributions and the Job Security Fund. Learn more about the processes for setting up payroll, calculating taxes, submitting payments compliantly, and adhering to due dates in Oman.
Capital City
Muscat
Currency
Omani Rial
(
﷼
)
Timezone
OST
(
GMT+4
)
Payroll
Monthly
Employment Cost
12.50%
Understanding payroll taxes is crucial for businesses operating in Oman, whether you're a small startup or a large enterprise. While Oman offers a tax-friendly environment with no personal income tax for employees, employers must navigate specific payroll obligations to ensure compliance and avoid penalties. Key considerations include social security contributions for Omani nationals, the Job Security Fund, and adherence to payroll processing timelines.
This guide aims to provide clarity on these aspects, helping you manage payroll efficiently and stay compliant with Omani regulations.
1 January - 31 December is the 12-month accounting period that businesses in Oman use for financial and tax reporting purposes.
The payroll cycle in Oman is usually monthly, with employees being paid as stipulated in the employment contract.
As of January 1, 2025, the minimum wage for Omani nationals remains at OMR 325 per month, which is unchanged since 2013. This comprises of OMR 225 as basic salary and OMR 100 in allowances. The Omani government is actively considering a proposal to raise the minimum wage for Omani workers to between OMR 360 and OMR 400 per month. The preferred figure is OMR 400, but the final decision is pending further evaluation.
There is no statutory minimum wage for expatriate workers.
A proposal is under government review to increase the minimum wage for Omani workers to between OMR 360 and OMR 400 per month, considering factors such as average monthly wages and the annual inflation rate.
Oman does not have a fixed schedule for reviewing the minimum wage; adjustments are made periodically based on economic conditions and labor market needs.
As of 2025, the average monthly salary in Oman is approximately 1,800 Omani Rials (OMR), which is roughly USD 4,675. However, this figure can vary significantly based on factors such as industry, experience, education, and location.
Average salary by occupation:
In Oman, the payment of a 13th salary or bonus is not a legal requirement. However, many employers in Oman choose to offer bonuses or additional compensation to their employees, typically during festive seasons or as a reward for performance. The provision of such bonuses is usually at the discretion of the employer and may vary depending on the company's policies and financial performance.
In Oman, payroll calculations involve determining the gross salary, which includes basic salary and any applicable allowances such as housing, transportation, and utilities. For Omani nationals, social security contributions are mandatory, with the employee contributing 7% and the employer contributing 10.5% of the monthly salary. Additionally, both the employer and employee contribute 1% each to the Job Security Fund, totaling 2% for this scheme. Expatriate employees are exempt from social security contributions but are still required to contribute to the Job Security Fund.
Oman has a straightforward payroll tax structure, focusing on social security and job security contributions. Here's an overview:
Employee Contribution: 7% of gross salary
Employer Contribution: 10.5% of gross salary
Purpose: To provide financial support in cases of old age, disability, and death.
Exemptions: Expatriate employees are not subject to social security contributions.
Penalties for Non-Compliance: Late payments may incur penalties as stipulated by the Public Authority for Social Insurance (PASI).
Employee Contribution: 1% of gross salary
Employer Contribution: 1% of gross salary
Purpose: To support Omani employees who lose their jobs involuntarily.
Exemptions: Expatriate employees are not required to contribute.
Penalties for Non-Compliance: Employers failing to make timely contributions may face fines.
Setting up a payroll system in Oman involves several key steps:
Public Authority for Social Insurance (PASI): Register all Omani employees for social security and job security contributions.
Ministry of Labour: Ensure compliance with labor laws and regulations.
Tax Authority: While there's no personal income tax, registration may be required for corporate tax purposes.
Selecting an efficient payroll system is essential. Consider the following options:
Documentation: Collect necessary documents such as employment contracts, identification, and bank account details.
Registration: Register employees with PASI and other relevant authorities.
Payroll Setup: Input employee details into the chosen payroll system, ensuring accurate salary and deduction calculations.
Effective payroll processing involves the following steps:
Methods: Use electronic systems or manual logs to track working hours.
Compliance: Ensure adherence to standard working hours and overtime regulations.
Gross Salary: Sum of basic salary and allowances.
Deductions: Apply employee and employer contributions to social security and the Job Security Fund.
Net Salary: Subtract deductions from the gross salary to determine the amount payable to the employee.
Format: Include details such as gross salary, deductions, and net salary.
Delivery: Provide payslips electronically or in print, ensuring employees have access to their payment information.
Timeliness: Submit contributions to PASI and other relevant authorities by the stipulated deadlines.
Documentation: Maintain records of submissions for audit and compliance purposes.
Methods: Disburse salaries through bank transfers or other approved methods.
Timeliness: Ensure payments are made promptly to maintain employee satisfaction and compliance.
Employers must submit payroll taxes to the following authorities:
Submission methods include online portals, bank transfers, or other government-approved channels. Ensure all payments are made by the due dates to avoid penalties.
Understanding the tax obligations for both employers and employees is crucial when operating in Oman's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Oman.
Employer payroll contributions are generally estimated at an additional 12.5% on top of the employee salary in Oman.
In Oman , the typical estimation for employee payroll contributions cost is around 8%.
Oman does not impose personal income tax.
In Oman, employers are required to contribute 10.5% of their employees' salaries to social security, managed by The Public Authority for Social Insurance (PASI). This system provides pensions and various other benefits for insured individuals and their dependents, ensuring financial security and support for workers and their families.
Understanding the tax obligations for both employers and employees is crucial when operating in Oman's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Oman.
Employer payroll contributions are generally estimated at an additional 12.5% on top of the employee salary in Oman.
In Oman , the typical estimation for employee payroll contributions cost is around 8%.
Oman does not impose personal income tax.
In Oman, employers are required to contribute 10.5% of their employees' salaries to social security, managed by The Public Authority for Social Insurance (PASI). This system provides pensions and various other benefits for insured individuals and their dependents, ensuring financial security and support for workers and their families.
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Global employers operating in Oman often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Oman.
Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.
In Oman, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.
Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.
Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.
Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.
A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Oman.
Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Milani Notshe
Milani is a seasoned research and content specialist at Playroll, a leading Employer Of Record (EOR) provider. Backed by a strong background in Politics, Philosophy and Economics, she specializes in identifying emerging compliance and global HR trends to keep employers up to date on the global employment landscape.
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Payroll taxes in Oman are primarily based on social security and job security contributions. For Omani nationals, the employee contributes 7% and the employer contributes 10.5% to social security. Both parties contribute 1% each to the Job Security Fund.
Employers can manage payroll internally using payroll software or outsource to payroll service providers. Utilizing platforms like Playroll can streamline the process and ensure compliance with local regulations.
Key elements include gross salary, allowances, social security contributions, job security fund contributions, and net salary. Employers must also provide payslips and ensure timely payments.
The total payroll tax for Omani nationals is 18.5% of the gross salary, comprising 7% employee contribution and 11.5% employer contribution to social security, plus 2% combined contribution to the Job Security Fund. Expatriate employees are exempt from social security contributions but must contribute to the Job Security Fund.
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