The Sultanate of Oman is shaking up how companies hire foreign workers by introducing a tiered fee structure for expatriate work permits that directly ties costs to compliance with national employment targets known as Omanisation. The move, announced this week by the Ministry of Labour, rewards firms that meet or exceed local hire quotas with steep fee discounts, while punishing those lagging behind by doubling their permit fees. This approach, part of wider labour reforms aimed at creating more job opportunities for Omani citizens, reflects a growing regional trend toward tightening rules on foreign labour and elevating the role of national workforces.Under the new system, compliant companies in the “Green Category”, those that hit Omanisation benchmarks, will enjoy a 30 percent discount on expatriate work permit and practice licence fees. In contrast, non-compliant employers who fail to bring enough locals into their ranks will pay double the usual fee for the same permits, making it significantly more costly to hire foreign talent. Omanisation quotas vary by sector and company size, but the underlying message is clear: make room for Omani workers, or pay a steep price.
How Oman’s tiered fee system works: Carrots and sticks
The tiered model is designed as both an incentive and a penalty mechanism. Firms that exceed their national hire quotas are placed in the Green Category, unlocking the 30 percent discount on key work permits. Since expatriate work permit fees are a routine cost for many businesses, a reduction of this size represents a significant annual saving, effectively a financial reward for prioritising Omani employment.
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By contrast, companies that neglect Omanisation expectations will find themselves in the Non-Compliant Category, where the base cost of all expatriate work permits and related professional licences, is doubled. This punitive measure is aimed at shifting recruitment calculus: if it is cheaper to invest in hiring local talent than continually renew permits for foreign workers, firms will re-evaluate their workforce strategies.Complementing the fee overhaul, the Ministry has also extended the validity of work-practice licences for expats from 15 to 24 months, aligning them with standard residency permits, a change welcomed by employers as it reduces administrative churn. Furthermore, employers can now upgrade an existing worker’s professional category simply by paying the difference in fees, rather than going through the full process of applying for a new permit. These administrative simplifications aim to balance the tougher fee regime with smoother operational processes.
Omanisation and labour policy trends
Oman’s new tiered fee regime comes amid a broader and long-running initiative to strengthen national labour participation, a policy widely known across the Gulf as Omanisation. Similar efforts elsewhere in the region tie benefits or penalties to local hiring benchmarks, with countries like the UAE and Saudi Arabia implementing strict compliance requirements for companies and linking national employment performance to government contracts or licences.
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In Oman’s context, national debate around these reforms has extended into discussions online and in business circles. Some expatriate employers have voiced concern that compliance expectations, such as minimum local hire quotas, can complicate workforce planning and increase costs, while others point out that compliance brings benefits such as discounted fees that eventually outweigh the penalties. Posts on regional forums suggest that employers who fail to meet Omanisation levels may face restrictions on visa renewals or additional bureaucratic hurdles, underscoring the importance of aligning hiring practices with policy goals.Importantly, this policy does not ban foreign hires, it simply makes it more expensive for companies to ignore local hiring targets. In recent years, authorities have also enacted rules reserving certain professions exclusively for Omani citizens, further tightening the labour market and accelerating opportunities for nationals across sectors.
Why Oman’s tiered fee system matters for businesses and the economy
The tiered fee approach marks a shift toward “stick and carrot” workforce governance: companies that help build the national workforce are financially rewarded, while those that rely heavily on expatriate labour are nudged, through higher costs, to rethink their composition. For businesses, this means –
- Lower Costs for Omanisation Leaders: Discounted permit fees can significantly reduce operating expenses, a boon for companies that invest in training, recruiting and retaining Omani employees.
- Higher Costs for Non-Compliant Firms: Doubling fees for non-compliance means hiring foreign labour becomes a strategic and financial decision, not a default.
- Better Workforce Planning: The extended validity of licences and flexible upgrade options reduce administrative burden and allow firms to adjust to the evolving policy landscape more smoothly.
Economists and labour policy analysts see these changes as part of Oman’s broader strategy to reduce dependency on expatriate labour, especially in mid-level and supervisory roles where nationals can increasingly play a more prominent part. With long-term development goals tied to local employment growth, such structural reforms are expected to ripple through recruitment practices across the private sector.
Concerns and criticisms of Oman’s tiered fee system
Despite wide policy support from authorities, critics warn that the tiered fee system might strain smaller businesses that already contend with tight margins and high operational costs. Firms that struggle to find qualified local talent, especially in specialised or technical roles, argue that doubling expatriate permit fees could limit their ability to function competitively. This has led to calls for targeted training programmes, stronger labour market matchmaking systems and transitional exemptions that help companies adapt.
Oman’s New Expat Work Permit Fees: Tiered System Rewards Omanisation Compliance
Some online commentators also note that while fee incentives and penalties are important, they must be paired with robust workforce development initiatives including education, vocational training and career pathways to ensure that local job seekers are adequately equipped to fill roles previously dominated by expatriates. Without that holistic support, critics argue, businesses may face compliance pressures without the necessary human capital to meet them.
Looking ahead: 2026 and beyond
The tiered fee system is slated to take effect as Oman enters a broader five-year development plan focused on economic diversification, job growth and private sector empowerment, initiatives also reflected in national budgets and social investment strategies. With permit fees now a lever in this broader policy toolkit, observers expect:
- Increased hiring of Omani nationals across sectors
- Better alignment between private sector growth and national labour priorities
- A more predictable regulatory landscape for foreign labour
- Potential expansion of fee incentives or targeted exemptions over time
By linking financial consequences so directly to a company’s local hire performance, Oman is sending a clear message: local employment matters and the cost of inaction will rise for businesses that choose to ignore it. Oman has introduced a tiered expat work permit fee structure that rewards firms meeting Omanisation goals with 30 percent discounts and penalises laggards by doubling fees. The policy also extends licence validity and simplifies permit category upgrades to ease administrative burden.This change is part of a broader push to increase employment opportunities for Omani citizens and reduce reliance on foreign labour. Critics say complementary measures, such as skills training and workforce development, are necessary to help companies adapt.
