One of the main aspects of building your local workforce in Kuwait is the payments. You need to know how you will going to run your payroll employee Kuwait. Moreover, you should ensure you are doing it in total compliance with local regulations.
Setting up your payroll is a great challenge, particularly if you are a foreign employer. In this regard, it can be helpful to get payroll services Kuwait. With the support of Kuwait payroll companies, you can have peace of mind when it comes to payments, deductions, calculations, and more.
Here at Connect Resources, we are one of the top payroll processing companies, and we can help you achieve a seamless process. With our service payroll, you will not have to learn about the set of labour laws, tax regulations, and others, because we will be in charge. We make the process easier so you can expand to Kuwait easily.
Taxation rules in Kuwait
As an employer in Kuwait, you need to learn everything you can about taxation and withholdings requirements. It is essential to understand how to calculate and process the taxes of your open payroll.
Here are the most important things you need to know about taxation rules for your Kuwait payroll process:
- There are no personal income taxes in Kuwait
- The employer payroll tax is 11.5% in total: 11% for pension and 0.5% for unemployment
- The employee payroll tax is 10.5% total: 10% for pension and 0.5% for unemployment
- Foreign companies have to pay a corporate tax rate of 15%
- For social security, employees have to pay 7.5% and employers have to pay 11%
We understand how complex can be to deal with taxes as an employer. For this reason, with our Kuwait employee payroll services, we can relieve this burden from you and offer comprehensive assistance.
Payroll options for companies in Kuwait
You have several options to run your payroll in Kuwait. It is essential to choose the one that is the best fit for you and for the nature of your business.
Here we have the four options available:
You can run your internal payroll with your own resources. To do this, you will have to hire payroll specialists and invest in software, equipment, and office space. Also, you will have to learn about local rules so you can ensure total compliance.
You can process your Kuwait payroll in your home country using your parent company. You can add your Kuwait employees to your current payroll and process your remote payroll. Nevertheless, this may be complex since you need to have a complete understanding of local laws to avoid non-compliance issues.
Local processing company:
A local processing company like Connect Resources can offer you PEO payroll services. These PEO services are aimed at companies that already have a subsidiary in Kuwait, and it is excellent for handling your PEO employee.
The last option is a payroll global. An Employer of Record like Connect Resources can be your local entity, hire employees and pay them on your behalf. You will not have to worry about anything because we handle all of your tasks.
How to set up a Kuwait payroll
Once you know the options you have available to set up your payroll, you can start the process. It is essential to know that you cannot hire employees and run the payroll if you do not have a local entity. You have two options for setting up payroll in Kuwait
- If you have an entity in Kuwait: perhaps you are planning to establish a subsidiary or you already have one, in this case, you can set up your payroll internally, remotely, or look for peo payroll companies that can run your in-country payroll. The last one is best for you if you are planning on a long-term expansion in Kuwait.
- If you do not have an entity in Kuwait: If you have not still established an entity in Kuwait, you can get the payroll services company from an EOR like Connect Resources. This option is best if you want to test the market, or if you are considering expanding to Kuwait but you still have not found the time or resources to do it.
Entitlement and termination
When it comes to handling the payroll, it is equally important to know about the entitlement/termination terms according to the Labour Law.
Each of your employees should have a valid employment contract, but when you need to terminate them it may be challenging. This is why payroll processing services are so useful because they can help you with this type of difficult task.
Here are the most important aspects of this matter:
- There is a probation period, but it cannot exceed 100 days.
- The notice period in Kuwait is of three months both for employer and employee
- Severance pay in Kuwait for employees paid monthly is as follows: 15 days of pay for each year of employment for the first five years of service. After that, it increases to one month per year of service
- Severance pay in Kuwait for employees paid weekly, daily or hourly, is as follows: 10 days of pay for each year of employment for the first five years of service. After that, 15 days for each year
Important considerations about payroll processing in Kuwait
Since processing your payroll employee Kuwait can be a complex matter, it is crucial to know everything you can about it. Here we have the most important aspects of payroll processing in Kuwait.
- The frequency of salary payments varies depending on the type of pay for which employees were hired. Monthly paid employees should get their wages at least once a month. And other types of workers should receive their payments once every two weeks.
- The law does not have any provisions regarding a 13th
- Although the law does not define statutory pay components, the most common ones are basic salary, allowances (housing, transport), and living contribution.
- The variable components in a Kuwait payroll are overtime, bonus, sales commissions, incentives, and leave passage.
- The official salary payment currency in Kuwait is the Kuwait Dinar, and all payments should be made in the country’s currency.
- In Kuwait, the Wage Protection System (WPS) started to be implemented to protect salary payments to employees.
If you have trouble understanding how to process your payroll employee Kuwait, you can look for payroll providers that can offer a peo payroll service that exceeds your expectations.
Why Choose Us
If you have been looking for the best PEO outsourcing, here at Connect Resources we can help you with your payroll work. With our payroll processing outsourcing, we ensure accurate and timely payments to your workforce in Kuwait.
Since we are a leading payroll outsourcing company, we can provide a service that meets your needs so you can achieve a seamless expansion to Kuwait. Our payroll outsourcing Kuwait is designed to help you thrive. Contact us to learn more about our outsourcing payroll services and receive a tailored solution.