Our guide to Payroll in Oman

Doing Business in Oman

Investing in Oman

Oman continues implementing Vision 2040, prioritizing foreign investment, economic diversification, and regulatory simplification. Key reforms allow 100% foreign ownership in most sectors and reduced capital requirements for company formation under the Foreign Investment Law (Royal Decree 50/2019).

Basic Facts About Oman

Capital: Muscat

Currency: Omani Rial (OMR), pegged at OMR 1 = USD 2.6

Population: ~5.21 million (2024 estimate)

Public Holidays (2026)

Oman has announced the 2026 holiday calendar early, except Eid dates which depend on moon-sighting committee announcements

How to say?

Hello: Marḥaban / As-salāmu ʿalaykum (Mar-ha-ban / As-sa-la-mu a-lay-kum)

Good Morning: Sabāḥ al-khayr (Sa-bah al-khair)

Good Evening: Masā’ al-khayr (Ma-sa al-khair)

Do you speak English? Btihki inglīzi? (Bti-hki in-glee-zee)

Goodbye: Maʿa as-salāma (Ma-a sa-la-ma)

Thank you: Shukran (Shook-ran)

See you later: (No fixed direct equivalent; common parting phrase) “Maʿa as-salāma” is used in Oman to express parting similar to “See you later.” (Ma-a sa-la-ma)

Registrations & Establishing an Entity

Company formation options include LLCs, branch offices, and free-zone entities. Increasing digitization (2,680+ digitalized procedures) supports simpler and faster registrations.

In 2026, documentation standards have tightened, requiring consistency across all submission files, with fewer “second chances” for corrections. Stricter requirements affect banking, registration time, and compliance checks.

Setting Up a Legal Structure

The regulatory environment now permits:

• Full foreign ownership in most activities
• Streamlined licensing & digitized processes
• Clearer guidance for LLCs, branches, free-zone setups

Banking

Regulated by the Central Bank of Oman under the Banking Law (Royal Decree 114/2000).

Documentation hygiene plays a major role in opening corporate bank accounts in 2026 due to stricter verification expectations.

Working Week

Oman follows a Sunday–Thursday official working week.

Employment Law

Holiday Accrual / Calculations

Annual leave: 30 days per year after one year of service.

Maternity / Paternal Leave

• Maternity leave increased to 98 days.
• Paternity leave: 7 days.

Sickness

Paid sick leave entitlement increased to up to 182 days, paid in tiers (100% → 75% → 50% → 35%).

Labor Law (Royal Decree 53/2023 – still in effect in 2026)

Key provisions:

• Fixed-term contracts no longer convert automatically to unlimited contracts; however, employment exceeding 5 years becomes unlimited.
• Special unpaid leave allowed, with employee covering full social security contributions.
• Expanded list of restricted occupations under Omanization (2026 additions include programmers, system operators, engineers).

Tax & Social Security

Tax Rates – Personal Income Tax

A new personal income tax regime is being phased in (effective 2028), but current thresholds and structures are already published:

• 0% tax on OMR 0–41,999.99
• 5% tax on income above OMR 42,000

Foreign-sourced income is generally not taxed for individuals.

Corporate Tax

• Standard corporate tax rate: 15%
• Small business preferential rate: 3% (if meeting capital, revenue, and employment criteria)
• Oil sector taxation: 55%

Social Security

• 8% employee contribution for Omani citizens under the Social Security & Job Security Scheme
• Expatriates are exempt

Minimum Wage 2026

The minimum wage for Omani nationals in 2026 remains OMR 325/month (OMR 225 basic + OMR 100 allowances).

There is no legal minimum wage for expatriates. Salaries for expats are based on employment contracts and market rates.

A review is ongoing, with proposals to increase the wage to OMR 360–400, but no official decree issued yet.

Payroll

Payroll requirements include:

• Accurate wage statements (listing salary, deductions, net pay)
• Permissible deductions: tax, social security, loan repayments, disciplinary penalties
• Mandatory payment through bank transfer or documented registers

Reports

Employers must generate clear payroll records, including overtime, allowances, statutory deductions, and end‑of‑service accruals, to comply with labor audits.

New Employees & Leavers

Registration with the Tax Authority is required within 60 days of starting an enterprise/activity. Employers must submit income returns electronically and adhere to payment deadlines to avoid penalties (1% per month on unpaid tax).

Employee Benefits

End-of-service gratuity for expatriates:

• 15 days of basic salary for first 3 years
• 1 month salary for each additional year

Additional benefits:

• Overtime pay: 1.25× (day), 1.5× (night)
• Double pay or compensatory leave for public holiday

Visas & Work Permits

Key changes include:

• Work permits typically last 2 years
• Renewal is tied to employer meeting Omanization quotas
• Authorities may replace expats if suitable Omanis become available
• Certain occupations restricted to Omani nationals (marketing, mechanical/electrical roles, quality control, brokers)

Additionally, foreign-owned companies must employ at least one Omani national within one year of establishment.

Key updates in 2026

Oman’s payroll and employment landscape continues to evolve in 2026, with employers facing increased compliance obligations linked to social protection, workforce regulation and tax transparency.

A key development is the continued implementation of the Social Protection Law introduced under Royal Decree 52/2023. The Social Protection Fund (SPF) framework remains a major focus area for employers in 2026, particularly around contribution management and worker coverage. Employers are required to maintain accurate payroll reporting and ensure timely social insurance contributions for eligible Omani nationals.

Further changes were introduced through Ministerial Decision No. 1/2026, which updated the rules governing work injuries and occupational disease insurance. The regulation expanded mandatory coverage to include workers on temporary, part-time and training contracts, increasing the need for payroll systems to correctly classify employees and calculate employer-funded insurance contributions. Employers are required to contribute 1% of insured wages toward this branch of coverage.

From a tax perspective, Oman also continues preparations for broader fiscal reform. While personal income tax is not due to take effect until 2028, businesses operating in Oman are already reviewing payroll structures and compensation reporting requirements following the publication of the Personal Income Tax Law in 2025. The future introduction of a 5% personal income tax on higher earners is expected to drive increased attention on payroll data quality, taxable benefits and expatriate remuneration planning.

In addition, Oman introduced Pillar Two top-up tax measures effective from 1 January 2026 for large multinational groups with consolidated revenues above EUR 750 million. Although primarily corporate tax focused, multinational employers may need to review payroll cost allocations, intercompany recharge structures and employee-related reporting obligations as part of wider global tax compliance initiatives.