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Hiring in Somalia
Somalia, officially the Federal Republic of Somalia, is a country in the Horn of Africa. Mogadishu is the capital and the largest city of Somalia. Somali and Arabic are the official languages. Somali Shilling is the official currency. Somalia’s economy is mainly based on livestock farming, remittance companies and telecommunications. Somalia’s main trading partners are United Arab Emirates, Oman and Yemen. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Somalia’s legal and tax regulations. Employment regulations are covered by the Labor Code. Labor Code stipulates that employees are entitled to 15 days of annual leave. Income tax is due and payable on the taxable income of all citizens and foreign employees working in Somalia. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Somalia’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- The probationary period is generally of 3 months
Annual Leave
- Workers shall be entitled to 15 days leave with pay for every year of continuous service
Public Holidays
- New Year's Day (1st January)
- Labor Day (1st May)
- Eid al-Fitr
- Independence Day (26th June)
- Independence Day (1st July)
- Eid al-Adha
- Ashura
- Prophet's Birthday
Maternity Leave
- A pregnant employee shall be entitled to a maternity leave 16 weeks in duration.
Paternity Leave
- There is no paternity leave
Sick Leave
- There is no paid sick leave
Work Hours
- The standard work week is of 8 hours per day for 6 days a week
Overtime
- Overtime is paid at a premium of 30%
Notice Period
- Either of the contracting parties may terminate a contract of employment by giving written notice as under:
-
- Not less than ten days in the case of manual workers;
- Not less than 30 days in the case of non-manual workers.
Severance
- Severance pay is at the following rates
-
- Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) is equivalent to 4.3 weeks of pay
- Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) is equivalent to 21.7 weeks of pay
- Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) is equivalent to 43.3 weeks of pay
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or the 14th month salary.
- Employees are entitled to 30 days annual leave.
- There is no evidence that it is customary to give bonuses.
income tax
- Income tax is due and payable on the taxable income of all citizens and foreign employees working in Somalia, at the rate or rates of tax fixed by the schedule below.
- The income tax is payable to the Federal Government of Somalia under authority of this Appropriation Law and Law No. 5, November 7, 1966.
- Income tax is payable by all employers, government and private, and including not-for-profit organizations operating in the Non-Government Sector (NGO’s), based on the payments, of wages, salaries, allowances and commissions, made to their employees.
- The amount of personal income tax payable is based on the total of monetary payments made in the calendar month to individuals in the public sector and private employees by way of wage and salary compensation and allowances paid in relation to employment, assessed in accordance with the schedule in the table below:
|
Monthly Income bracket (in US $) |
Tax Rate (%) |
Assessment Formula |
|
0-200 |
0 |
Exempt |
|
201- 800 |
6 |
Income above US $ 200 and up to $800 |
|
801-1,500 |
12 |
Income above US$ 800 and up to $1,500 |
|
1,501-0ver |
18 |
Income above US $ 1,501 |
immigration
- People intending to travel to Somalia may inquire with the Directorate of Immigration & Naturalization whether they need to obtain a visa prior to arrival.
- The processing time of Somali visas is can take several working days so be sure to file an application in good time.
- The type of visa that you require for entry into Somalia depends on several different factors such as your nationality, the purpose of your planned visit and duration
- It is requirement travelers to have at least six months’ validity remaining on their passports.
- Persons wishing to enter Somalia for a temporary visit, require entry Visa, for instance:
-
- on business or to take part in a conference
- to visit relatives and friends
- as a tourist
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Tourist Visa |
|
90 days |
Foreigners seeking to visit Somalia for tourism purposes must obtain a tourist visa |
|
Business Visa |
|
90 days |
Foreigners seeking to visit Somalia for business purposes such as meetings and conferences must obtain a Business Visa |
value added tax
- The standard rate of VAT is 5%
|
VAT |
|
|
Standard Rate |
5% |
withholding tax
- Dividends are subject to a withholding tax rate of 5%/15%/35%
- Interest payment are subject to a withholding tax rate of 10%/35%
- Royalties are subject to a withholding tax rate of 10%/35%
|
WHT |
|
|
Dividends |
5%/15%/35% |
|
Interest |
10%/35% |
|
Royalties |
10%/35% |
termination
Either of the contracting parties may terminate a contract of employment by giving written notice as under:
-
- Not less than ten days in the case of manual workers;
- Not less than 30 days in the case of non-manual workers.
- Severance pay is at the following rates
- Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) is equivalent to 4.3 weeks of pay
- Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) is equivalent to 21.7 weeks of pay
- Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) is equivalent to 43.3 weeks of pay
statutory benefits
- These are mandatory benefits as postulated by law
- These include public holidays, annual leave, sick leave, maternity leave, overtime pay, severance pay.
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Public Holidays |
|
Annual Leave |
|
Maternity Leave |
|
Paternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- The tax payable is to be withheld by the employer each calendar month and paid into the Treasury Single Account of the Federal Government of Somalia at the Central Bank, Mogadishu within 10-days after the end of each calendar month
- All employers withholding personal income tax are required to submit details of amounts of income tax withheld each month for each employee to the Inland Taxation Department of the Ministry of Finance of Somalia in the form advised in instructions.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Mali ranked 190th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% |
Based on two weeks bonuses (Child Bonuses for those employees that have children - one for Ramadan, one for Arafa) |
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Based on one year of service (1/12th of monthly payments) |
| Vacations % | Employees are entitled to an annual holiday of 30 days (8.24% of annual salary) |
| Notice % |
Based on one year service (generally for an indeterminate contract, it is hard to terminate and if that is a possibility, the employer must pay 4 months salary. For a fixed term contract 6 weeks notice is available) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% |
0%
|
|
Total percentage of Salary (yearly)
|
The total employment accruals as a percentage of salary per anum are equal to 23.2%
|
employer accruals
Additional information (Country Accruals)
| Social security | 7.00% |
| Maternity leave | 14 weeks |
| Description | Contributions vary between 5% and 7% of payroll, depending on the reported accident rate.
|
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | Workers shall be entitled to 15 days leave with pay for every year of continuous service | This equals 4.1% (15/365 days) of annual income |
| Maternity Leave | A pregnant employee shall be entitled to a maternity leave 16 weeks in duration. | This equals 30.76% (16/52 weeks) of annual income |
| Overtime | Overtime is paid at a premium of 30% | Depends on the number of overtime hours worked |
| Severance | Severance pay is at the following rates • Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) is equivalent to 4.3 weeks of pay • Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) is equivalent to 21.7 weeks of pay • Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) is equivalent to 43.3 weeks of pay |
This equals 8.26% (4.3/52 weeks) of annual income |
