OMAN Law and Practice Contributed by: Said Al-Shahry, Thamer Al-Shahry, Jeremy Pooley, Maria Mariam Rabeaa Petrou, Mujtaba Ali Kazmi and Salim Al Harthi, Said Al Shahry & Partners
Social Insurance The following taxes apply. • Insurance for old age, disability and death – Omani employees must contribute 7.5% of their gross salary to the Social Protection Insurance (SPI). The employer is also required to contribute an amount equal to 11% of the gross salary of an Omani employee. The gross salary is capped at OMR3,000 per month for the purpose of calculat - ing these contributions. • Insurance for work injuries and occupational diseases – the employer is required to contribute an amount equal to 1% of the gross salary of an Omani employee. The gross salary is capped at OMR3,000 per month for the purpose of calculat - ing these contributions. • Insurance for employment security – Omani employees must contribute 0.5% of their gross salary to the SPI. The employer is also required to contribute an amount equal to 0.5% of the gross salary of an Omani employee. There is no cap for calculating these contributions. • Insurance for maternity/paternity leave – the employer is required to contribute an amount equal to 1% of the gross salary of all employees (Omani and expatriates). The gross salary is capped at OMR3,000 per month for the purpose of calculat - ing these contributions. • Insurance for sick/extraordinary leave – with effect from July 2025, the employer is required to contrib - ute an amount equal to 1% of the gross salary of an Omani employee. The gross salary is capped at OMR3,000 per month for the purpose of calculat - ing these contributions. Contributions for the three types of insurance referred to above are deducted from the employee’s salary on a monthly basis and remitted by the employer to the SPI. 5.2 Taxes Applicable to Businesses Income Tax The following categories of persons (Omani taxpayers) are liable to income tax in Oman: • enterprises; • establishments;
tract is arbitrary or without legal justification in accord - ance with the Labour Law, then an employee may file a claim for unfair dismissal. In such circumstances, the court may order the employee’s reinstatement or the payment of not less than three months’ salary as compensation. There are no definitive guidelines for the courts to consider in determining unfair dismissal claims or how compensation for unfair dismissal is calculated. The employer may, in the event that an economic cause exists and after obtaining the approval of the committee as stipulated in Article 45 of the Labour Law, reduce the number of workers in the company to the extent required to maintain the continuity of the business and to avoid the risks of bankruptcy. The employer must comply with the following require - ments if the approval of the committee is obtained: • follow a fair standard in the selection of employ - ees whose contracts will be terminated, such as employees with the lowest performance scores or any other standard; • grant the employees whose contracts will be termi - nated a notice period of no less than three months; and • give the employees whose contracts will be ter - minated priority to be reappointed if there is a job opportunity that matches their qualifications. 4.5 Employee Representations The Labour Law does not expressly include provisions relating to employee representations.
5. Tax Law 5.1 Taxes Applicable to Employees/ Employers Personal Income Tax
Although Omani citizens and residents are not cur - rently subject to personal income tax unless they solely own an establishment (as defined in 5.2 Taxes Applicable to Businesses ), Oman has introduced a 5% personal income tax (PIT) on individuals with annual income exceeding OMR42,000 effective from 1 January 2028, under Royal Decree No 56/2025.
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