Muscat – Despite the Omani government’s efforts to protect local businesses, particularly small and medium enterprises (SMEs), private company owners are expressing concern over the steep fines imposed for delayed payment of employer’s contribution to the Social Protection Fund (SPF).

Business owners are finding the 13.5% per month penalty for delayed monthly insurance contributions burdensome. Article 14 of the Insurance Law mandates that employers pay these contributions within 15 days following the due month. A failure to do so results in a 13.5% surcharge on the owed amount.

The law also requires employers to notify the SPF of any salary adjustments for insured employees in the month they are applied. Delay in reporting these changes attracts an additional charge of 13.5% on the increased salary amount.

Nasser al Hosni, a businessman and SME owner, shared with Muscat Daily his pain. “Our business struggled to pay the employees’ insurance during the pandemic, leading to fines that significantly strained our finances. The 13.5% monthly fine for any delay is excessive and is impacting private sector investments. I hope the authorities would reconsider these penalties and perhaps would have the government cover insurance contributions for SMEs with Riyada cards.”

Another company owner highlighted the challenges he faced due to economic strains from COVID-19 and fluctuating oil prices, leading to delayed payments and consequent hefty fines.

“We pay more than RO2,000 as employees’ contribution. Being charged 13.5% fine on late payments is unfair and unprecedented for government services globally,” he said, adding that the annual cumulative fine runs to about 162% of the actual dues.

He suggested that reducing the fine to about 2% could better support SMEs, stimulate the economy, and attract more private sector investors.

According to SPF, the purpose of the Social Insurance System is to create a secure working environment under its umbrella, offering protection against old age, disability, death, work injuries, and occupational diseases.

Registering Omani workers for social insurance is crucial to ensure their entitlements. Employers are obligated to register all workers to preserve their rights, encourage private sector employment, and foster a healthy employer-employee relationship.