Detailed Guide to Payroll Management in Qatar

Expansion to Qatar is a terrific strategy to get your firm established in the Middle East.

However, setting up business in a foreign country is not always straightforward. Apart from complying with the country’s laws and regulations, you must set up processes to manage payroll in Qatar.

We’ll take on the compliance risk as a worldwide PEO and leverage our current payroll in Qatar to help you in paying employees. 

Consider these fundamental steps for designing payroll policies and procedures in Qatar. If you’ve worked with payroll before and need a refresher, this first set of guidelines can help. However, if you want a more in-depth look, keep scrolling to view a more comprehensive guide.

Before you begin calculating pay, follow these steps:

1. First, obtain a company identification number (EIN)
2. Create state or municipal tax identification numbers
3. Collect payroll tax in Qatar and financial information from employees, including W-4 forms
4. Create a payroll in Qatar schedule for the company
5. Decide the dates for paying your payroll taxes in Qatar

To manually process payroll in Qatar, follow these steps:

1. Examine the hourly schedules of your employees
2. Calculate overtime pay
3. Make a gross salary calculation
4. Calculate deductions
5. Calculate net salary
6. Pay employees using their preferred delivery method (e.g., paper check, direct deposit)

Collecting employee information, setting up a Qatar payroll plan, tracking time worked and money owed, sending payments, and keeping accurate records are all basic processes in the payroll processing process.

Statutory deductions

For foreign companies wishing to expand in Qatar, the taxation requirements are simple. The government does not impose individual income taxes and social security taxes. However, it generally charges a flat corporate income tax of 10%. This tax applies to entities wholly or substantially owned by a non-Qatari corporation earning income from the country.

There are several elements of the salary in Qatar. However, Qatar labor law has no statutory components that outline the features that should make up an employee’s compensation. Some of the essential elements are listed below:

• Minimum wage

Qatar’s monthly minimum wage is 1,000 QAR. If employers do not offer food or lodging directly to employees, they must provide at least 300 QAR for food and 500 QAR for housing. Salaries must be paid in Qatar’s official currency. However, it can also be paid in any other currency compliant with the government’s financial system if both the employer and the employee agree in writing.

• Overtime

Overtime is defined as any additional hours an employee works outside of their regular working hours. According to Article 74, an employee is entitled to an additional payment equivalent to their regular wage plus a bonus of at least 25% for extra hours worked outside of regular working hours.

If the overtime occurs between 9 p.m. and 4 a.m. on a working day, the employee is entitled to their regular pay plus 50% more. If an employee works on a specified rest day, they are entitled to standard compensation plus a 150% rise, according to Article 75. Overtime hours are limited to a total of two hours each day.

• Gratuity

If the service time exceeds one year, Qatar gratuity is based on the last drawn basic salary and is computed at twenty-one days’ pay for every year of service. An employee who has completed one year or more of continuous employment is entitled to end of service remuneration at the end of their service, according to Article 54 of Qatar labor legislation.

• Annual bonus

Companies may also offer yearly bonuses in addition to the base salary. The bonus could be paid once a year or with the monthly wage. Bonuses and incentives are not mandatory in Qatar. However, many organizations offer bonuses and other incentives to motivate employees and retain talent. The bonus scheme structure depends on the company’s payroll policies and procedures in Qatar.

• Medical insurance

Medical Insurance is an integral part of the total salary structure. All employers cover medical insurance for their employees, which forms a part of the salary. Employers are required to provide medical insurance to their employees throughout their work term. Even though it is not needed, several employers also extend medical coverage to their employees’ dependents.

Qatar WPS

The Qatar Wage Protection System (WPS) is an electronic wage transfer system that allows private sector institutions and organizations to pay their employees through Qatar Central Bank-approved banks, exchange bureaus, and financial institutions. WPS enables the Ministry of Administrative Development, Labor and Social Affairs (MADLSA) to keep track of private-sector wage payments and ensures that they are fully paid on time.

You must first establish a subsidiary in Qatar before setting up your Qatar payroll. However, incorporation can take weeks or months, delaying your plans to hire staff, pay them, and begin functioning in the country. When you use a global PEO firm like Multiplier for Qatar payroll outsourcing, you need not set up a subsidiary before paying employees because you can use our payroll services.

Payroll in Qatar is a complex and time-consuming procedure. Most employers outsource your company’s payroll function. However, if you wish to internally manage payroll, follow the steps below.

1. Registration of employees into the payroll system: In Qatar, all employees must initially register with the department. As a record for the government, the payroll system receives entries from all employers. The following information about the staff is required for registration:

• Number of employees
• Payroll software 
• Payroll Schedule
• Employee information such as name, date of birth, etc.

2. Finalize the gross pay: Employees’ gross wages are their earnings before taxes and after deductions for retirement payments. What you write on an employee’s offer letter is the gross wage. It may be expressed in an hour, a pay period, or a calendar year. You must include taxable fringe benefits in your gross compensation calculation. Also, it is essential to include these bonuses in your employees’ total salary if you compensate them for cell phone or parking expenditures. 

The taxability of perks and allowances can be found on the government’s website. Hourly employees who work more than 44 hours per week or eight hours per day may be eligible for their standard hourly wage plus an additional half of that wage.

3. Consider the deductions: After you’ve determined your gross salary, you’ll need to factor in all the relevant deductions. This could include taxes or other employee benefits that are part of the employee’s compensation package, such as social security.

4. Make necessary corrections: Before you finish processing payroll in Qatar, check for errors by completing the Qatar payroll reconciliation. Your payroll register should be inspected alongside your tax records and general ledger. You’ll be able to distribute paychecks to all of your employees after correcting all of the errors. Employees can examine their pay stubs using the interfaces of most payroll software systems.

Employers who manually process payroll should continue to submit pay stubs to employees as proof of income when applying for loans and leases and identifying payroll difficulties. Finally, in your accounting software, generate a payroll journal entry. Your payroll and accounting systems can be linked to complete this stage.

5. Payroll records: Employers must record every transaction in the Qatar payroll records once all of the payslips have been distributed. This record must be kept for at least five years. They serve as confirmation that all employees were paid their due salaries.

Some payroll contributions are made by both the employer and the employees. The employer makes a 10% contribution towards Qatar Labour Law Monthly Contribution or the QFC Employment Regulation Monthly contribution.

However, the employee contributes about 5% to the Qatar Labour Law Monthly contribution or a 5%-8% contribution towards the QFC Employment Regulation Monthly Contribution. These contributions from both the employer and the employee are mandatory.

Payroll is usually done at least once a month in Qatar. Some companies also make bi-monthly payments to the employees based on the nature of the work. Other companies might also give their employees a bonus, which is equivalent to one month’s salary.

Qatar Payroll Options for Companies

Because every business is unique, you have a variety of Qatar payroll choices to select from, including:

• Internal payroll: Using an internal payroll for your subsidiary can help you streamline the payroll process. However, this usually only works for larger organizations with more resources and those hiring a larger team.

• Remote payroll: Companies may also choose to add the employees of their subsidiaries to the parent company’s payroll. Because of the remote option, employees from various organizations will have their own set of payroll rules and regulations in Qatar to follow.

• Local payroll processing firm: Your payroll will be outsourced to a local Qatar payroll processing provider, but you will be responsible for ensuring compliance.

• Fully outsourced payroll: You can also outsource your payroll to a global PEO agency. It takes care of all the compliances and also manages your payroll. You can make your payroll processing a hassle-free process by handing over the working of the entire process to a global company like Multiplier.

Entitlement and Termination Terms

Termination is one of the more challenging aspects of international business. Before recruiting staff, including entitlement and termination clauses in all employment contracts is recommended. 

If you have an indefinite agreement with the employee who has worked for less than five years in Qatar, you must provide them with 30 days’ notice of termination.

If the employee has worked for more than five years, they must be given at least two months’ notice before being fired.

Each employee is entitled to a severance pay-out upon termination after one year of continuous job engagement with the employer, based on the employee’s final wage and at least three weeks of the employee’s final basic salary for each year of service.

Notice period

An employee’s seniority determines notice periods in Qatar:

• If an employee has worked for one to five years, a one-month notice is necessary.
• A two-month notice is necessary if an employee has worked for more than five years.

If you aren’t familiar with processing payroll in Qatar, expansion to Qatar would be challenging. Instead, look for industry leaders who thoroughly understand the local market to help you succeed. 

You can compare the services of different payroll processing companies online and choose the one that best suits your business needs. 

Payroll can easily be outsourced to a firm like Multiplier in Qatar. Multiplier is well-known for delivering PEO services to various companies across Qatar. In addition, we can handle employee onboarding, payroll processing, and much more.

We take pride in offering the best SaaS-based PEO services available, which can assist you with everything from gross pay calculations to federal payroll Qatar tax filing.