Running payroll in Qatar

As the world’s major exporter of liquid natural gas and with a GDP estimated at $249 billion in 2021, Qatar is the economic leader in the Middle East and one of the fastest-growing economies in the world. With no personal income tax on employment income and a low CIT rate of 10% for most sectors, the country offers foreign businesses an appealing tax system. 

Doing business in Qatar is further made easy by the fact that the local business language is English, and the country is known for providing a business-friendly environment as well as incentives for foreign investors and international organizations. While employers are freed of the burden of calculating and withholding income tax from employee salaries and wages, organizations processing payroll in Qatar should keep an eye on the planned changes to the country’s social insurance system which are due to enter into effect in the beginning of 2023. 

Please note: The information provided in this guide is not valid for employees hired by entities or institutions established as part of or linked to the Qatar Financial Center (QFC), since QFC regulations for employment and payroll differ.

When setting up payroll in Qatar, the first step is to establish a legal presence, with Limited Liability Company (LLC) being the most frequently chosen corporate structure. However, foreign investors and businesses should keep in mind that there are requirements as to which percentage of the company must be held by Qatari nationals. 

Several registration processes are necessary before an organization can process payroll, including the registration for the Wage Protection System (WPS) - more information on the WPS can be found under the section “Payroll requirements” at the end of this guide. Furthermore, it is necessary to set up a local bank account to use the WPS and pay employee wages and salaries.

Qatar does not levy income tax on employment income, which is defined as employee wages and salaries as well as other allowances and payments provided by the employer. Employers therefore have no obligations with regard to calculating and withholding income tax on behalf of their employees. 

Social security contributions

The local social security system is mainly financed through the country’s high GDP, which is why the social security levy on employers and employees is minimal. The employer social security contribution rate is 10% (of the employee’s basic salary); however, contributions must only be made for employees who are Qatari nationals – i.e. no social insurance premiums must be paid for foreign employees. 

Employees in the private sector are currently not covered by the state pension system, but have to find a pension scheme arrangement with their employer. In case the company sets up a pension scheme for its employees, the latter are required to contribute 5% of their salary.

Furthermore, it is mandatory for employers to provide medical insurance to employees for the entire duration of their employment. Some businesses even offer an extension of the insurance coverage to the employee’s immediate family. It should be noted that there is no centralized system, but that employers are responsible for organizing medical insurance with a provider of their choice. The cost for medical insurance coverage is considered part of the general salary structure.

In July 2022, the government announced changes to the country’s Social Insurance Law, which will also impact the eligibility of employees for the statutory retirement pension scheme. With the new regime, private sector employees will gain access to state pensions. Further changes include an increase of the monthly total contribution rate from 15% to 21%, which will be split into a 14% contribution for employers and a 7% contribution for employees. The changes are expected to enter into effect on 3 January 2023. Details on the implementation rules and processes are still pending.

Employees in Qatar are entitled to various benefits. These include:

• Annual leave and public holidays: 3 weeks for employees with less than 5 years of service and 4 weeks for employees with more than 5 years of service; 10 paid public holidays

• Maternity leave: 50 days of fully paid maternity leave; at least 35 days must be taken after birth

• Paternity leave: no statutory requirement, but many companies offer between 3 and 5 days of paid paternity leave

• Parental leave: 1 hour of breastfeeding leave per day for employees who return to work after maternity leave

• Sick leave: up to 12 weeks of sick leave per year, paid at varying rates (2 weeks on full pay, next 4 weeks on half pay, next 6 weeks unpaid)

For more information on employee benefits and other employment requirements in Qatar (including severance pay and termination procedures), check out our Global Hiring Guide.

Typical pay components include basic salary and wages, housing and transport allowance as well as variable components such as overtime, commissions and bonuses. The national minimum wage currently (September 2022) stands at QAR 1,000 per month; however, employers must supplement the minimum wage with a monthly accommodation and food allowance of QAR 500 and QAR 300 respectively. 

Overtime is any hour worked beyond regular working hours and must be paid at a rate of at least 125%. For overtime during nighttime hours, the pay rate increases to 150%. The same pay rate applies to work on rest days. 

There is no legal obligation for employers to offer their employees bonuses, but many companies have implemented incentive schemes. As mentioned above, employers are obligated to provide medical insurance coverage for their employees.

Employees in Qatar must be paid at least once per month if they are employed on an annual or monthly basis. For all other employees, the payment frequency must be at least once every two weeks. It is mandatory to make payments in local currency, which is Qatari Riyal (QAR). Payments must be made within seven days after the end of the respective pay period. 

In 2015, Qatar's Ministry of Labor and Social Affairs and the Qatar Central Bank introduced the so-called Wage Protection System (WPS), which is an electronic transfer system companies have to use to pay salaries and wages. The system connects different banks and other institutions in the financial sector to guarantee that employees in the private sector are paid on time. 

Paying salaries and wages through the WPS is mandatory for all companies whose employees are registered with the Ministry of Labor and Social Affairs. The latter further uses the system as a database for recording wage and salary payments. In order to process payments through the WPS, the company's payroll information must be entered under a specific format, which is the so-called Salary Information File (SIF). Companies failing to comply with WPS requirements risk fines ranging from QAR 2,000 to QAR 6,000 per employee – or prison sentences of up to one month. 

It is acceptable to provide employees in Qatar with online payslips. Payroll records must be kept for at least six years.