The Gulf Cooperation Council (GCC) member states, which comprise the Kingdom of Saudi Arabia (KSA), Kuwait, the United Arab Emirates (UAE), Qatar, Bahrain and Oman, may each have their own laws, but many of their payroll regulations are similar. Here is an overview:
Income tax
Residents live tax-free in GCC member states. Individuals’ tax situation is not assessed.
Visas
All expatriate workers (non-nationals with a work permit or residency visa) employed in GCC countries are required to have a labour card and to register with the Ministry of Labour. All visas are linked to their employer or the Free Zone Authority, which becomes their sponsor. The visas of any dependents are also connected to the worker’s visa.
Taking out health insurance is mandatory in most GCC countries and, in many jurisdictions, is now linked to the visa process. The visa process requires applicants to undergo a medical examination, which includes a blood test. Some first-time applicants must also have a chest x-ray and/or vaccinations.
Issuing a visa is at the discretion of each country’s immigration and foreign affairs department. Processing times will differ depending on the nationality, background and even, in some cases, religion of the applicant.
At the time of writing, no residency visas are being issued for Qatari nationals in the UAE, KSA or Bahrain. Restrictions also apply in some GCC states in relation to issuing visas for Israeli, Syrian, Yemini and Iraqi nationals. Delays and rejections are likely for Indonesian, Egyptian, Moroccan and Lebanese passport holders.
Social security
Social security laws do not apply to expatriates, apart from in Bahrain, but companies that employ locals are required to register with the Pension Regulatory Authorities and make monthly contributions on their behalf. GCC countries share this framework so that all nationals, regardless of the country they work in, can benefit. However, pension rules and contribution rates differ from country to country.
Payroll cycles
It is common practice for employers to pay salaries once a month, usually between the 25th and 31st of each month.
Mode of salary payment
In 2009, the UAE introduced the Wage Protection System (WPS) to streamline, monitor and ensure that the salaries of all its resident workers were paid. KSA followed suit in 2013 and Qatar in 2015. Bahrain, Oman and Kuwait are currently in the process of implementing the system too.
WPS is a regulatory framework that requires all companies to register and pay employee wages through an electronic transfer to banks and other authorised financial institutions. Payment records are shared between local banks, the Central Bank and the Labour Department to ensure the payment of wages is timely. Following this approach is mandatory and non-compliance to WPS requirements incurs fines and other penalties.
Gratuity/End of service benefits
A gratuity is the typical statutory severance benefit that is paid across GCC countries and is usually correlated with retirement pay. Eligibility and how to calculate the benefit depends on each country’s specific legislation, but common factors include tenure of service and type of contract termination, that is, whether workers have resigned or been dismissed.
Employers can also choose to contribute to the employee’s pension scheme in lieu of their obligation to pay the gratuity. Once their employment is terminated, employees can likewise choose whether to receive either a pension or the gratuity, depending on which is more favourable to them.
Stephanie Williams is based in Dubai and manages TMF Group’s legal and governance team in Dubai, Abu Dhabi and Qatar. Originally from Dublin, she has spent over 20 years in the Middle East, living in Riyadh, Saudi Arabia, Abu Dhabi and the United Arab Emirates.
The Gulf Cooperation Council (GCC) member states, which comprise the Kingdom of Saudi Arabia (KSA), Kuwait, the United Arab Emirates (UAE), Qatar, Bahrain and Oman, may each have their own laws, but many of their payroll regulations are similar. Here is an overview:
Income tax
Residents live tax-free in GCC member states. Individuals’ tax situation is not assessed.
Visas
All expatriate workers (non-nationals with a work permit or residency visa) employed in GCC countries are required to have a labour card and to register with the Ministry of Labour. All visas are linked to their employer or the Free Zone Authority, which becomes their sponsor. The visas of any dependents are also connected to the worker’s visa.
Taking out health insurance is mandatory in most GCC countries and, in many jurisdictions, is now linked to the visa process. The visa process requires applicants to undergo a medical examination, which includes a blood test. Some first-time applicants must also have a chest x-ray and/or vaccinations.
Issuing a visa is at the discretion of each country’s immigration and foreign affairs department. Processing times will differ depending on the nationality, background and even, in some cases, religion of the applicant.
At the time of writing, no residency visas are being issued for Qatari nationals in the UAE, KSA or Bahrain. Restrictions also apply in some GCC states in relation to issuing visas for Israeli, Syrian, Yemini and Iraqi nationals. Delays and rejections are likely for Indonesian, Egyptian, Moroccan and Lebanese passport holders.
Social security
Social security laws do not apply to expatriates, apart from in Bahrain, but companies that employ locals are required to register with the Pension Regulatory Authorities and make monthly contributions on their behalf. GCC countries share this framework so that all nationals, regardless of the country they work in, can benefit. However, pension rules and contribution rates differ from country to country.
Payroll cycles
It is common practice for employers to pay salaries once a month, usually between the 25th and 31st of each month.
Mode of salary payment
In 2009, the UAE introduced the Wage Protection System (WPS) to streamline, monitor and ensure that the salaries of all its resident workers were paid. KSA followed suit in 2013 and Qatar in 2015. Bahrain, Oman and Kuwait are currently in the process of implementing the system too.
WPS is a regulatory framework that requires all companies to register and pay employee wages through an electronic transfer to banks and other authorised financial institutions. Payment records are shared between local banks, the Central Bank and the Labour Department to ensure the payment of wages is timely. Following this approach is mandatory and non-compliance to WPS requirements incurs fines and other penalties.
Gratuity/End of service benefits
A gratuity is the typical statutory severance benefit that is paid across GCC countries and is usually correlated with retirement pay. Eligibility and how to calculate the benefit depends on each country’s specific legislation, but common factors include tenure of service and type of contract termination, that is, whether workers have resigned or been dismissed.
Employers can also choose to contribute to the employee’s pension scheme in lieu of their obligation to pay the gratuity. Once their employment is terminated, employees can likewise choose whether to receive either a pension or the gratuity, depending on which is more favourable to them.
Stephanie Williams is based in Dubai and manages TMF Group’s legal and governance team in Dubai, Abu Dhabi and Qatar. Originally from Dublin, she has spent over 20 years in the Middle East, living in Riyadh, Saudi Arabia, Abu Dhabi and the United Arab Emirates.
