Working in Oman?
Oman: Pension, Tax, Working Conditions
The Omani Social Security System
A national insurance system was not implemented until 1992. Nowadays, all citizens between the age of 15 and 59 who are employed in the private sector and have a permanent job contract are covered by the social security scheme. This applies even if they work in another GCC country, i.e. in Bahrain, Kuwait, Qatar, Saudi Arabia, or the UAE.
Once an employee has reached the age of 60 (men) or 55 (women), they are entitled to an old-age pension. However, they must have paid social security contributions for at least 180 or 120 months, respectively.
The employee has 6.5% of their basic salary automatically deducted from their payroll while the employer contributes an additional 9.5% to the government. The latter then adds another 2% of the employee’s pension fund.
This fund also extends to disability benefits, as well as work accidents and occupational diseases. To top off the contributions for work-related injuries, the company pays yet another 1% of the salary.
You’re Not Included as an Expat
The social insurance contributions do not cover paid sick leave or maternity benefits. It might take a while for paid parental leave to become more common: around 20% of the current labor force is female.
Moreover, the national insurance scheme excludes self-employed people, domestic staff, artisans, and foreign workers — including expatriates. You should make sure that your employer has an accident insurance policy for foreign staff, e.g. as part of a private accident and health insurance plan.
Also consider during salary negotiations that you might want to lay aside a fixed sum for a private pension plan or to keep paying state pension contributions back home. You should find out if it’s possible to stay a voluntary paying member of your national pension scheme while you are working in Oman.
For further information on this issue, please contact the local social security office in your country of origin before you move to the Gulf.
A Different Taxation System
Even though you may need to save some part of your salary for your pension, you could financially benefit from working in Oman. The country’s tax laws are fairly generous, so your net income may be higher than at home.
There is no personal income tax or fringe benefits tax (which expats with ample perks will be glad to hear), and no gift tax, wealth tax, or VAT. However, if you carry out revenue-generating business activities as a non-Omani national — e.g. as the owner of an SME — you have to pay business tax.
Tax rates for corporate income depend on factors like the annual amount of said income and the percentage of Omani vs. foreign shares in the company. Businesses in certain priority sectors, for instance, private clinics, schools, or tourism, may profit from tax exemptions during the first five years. Especially if you own a permanent business establishment in Oman, it’s best to get professional advice from an Omani tax accountant.
You can avoid having to pay tax on the same income twice if your country of origin has entered into a double taxation agreement with Oman. So far, this applies to the following states:
- Algeria, Belarus, Brunei, Canada, China, Croatia
- France, India, Iran, Italy, Japan, Lebanon
- Mauritius, Moldova, Morocco, the Netherlands, Pakistan
- Seychelles, Singapore, South Africa, South Korea, Sudan, Syria
- Thailand, Tunisia, Turkey, the UK, Uzbekistan, Vietnam, Yemen
Working Conditions and Differences for Expats
The normal work week lasts from Saturday to Thursday and has 40–48 hours, according to Omani labor law. During Ramadan, Muslim employees only have to work 36 hours per week since they neither eat nor drink during the daytime. If an employee has to work overtime to complete a task or project, he or she is entitled to either more pay or time off in compensation.
There is a national minimum wage, but only for Omani citizens. However, expats will usually not be affected by this rule. Most expatriate employees are well-paid specialists — foreign workers that get the short end of the stick are mainly unskilled (and often underpaid) migrant laborers.
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