It is imperative to have an in-depth understanding of GOSI calculation and how it works in Bahrain, whether one is employed or self-employed. This article seeks to confer an overview of how to conduct GOSI calculations in compliance with Bahrain’s Labour laws.
The Scope of Bahrain Payroll and Tax
GOSI, or General Organization for Social Insurance, is a Bahrain-based organisation responsible for the calculation and collection of social insurance contributions. By contributing to GOSI, employees are provided with a variety of benefits such as medical coverage, retirement funds, disability support, and death grants. The amount that an employee contributes to GOSI is determined by the annual salary as defined by the Labour Law of Bahrain.
For individuals earning up to 900 BHD per month, GOSI contributions are 13% of their total salary. Those earning between 901 and 2000 BHD a month contribute 12% of their salary, whereas employees whose monthly income is greater than 2000 BHD will have to pay 8% of their salary to GOSI.
In addition, employers also contribute to the social insurance scheme by paying an additional 11% of their employees’ salaries each month. This amount is then transferred directly to the GOSI accounts in order to fund the benefits and services provided by them.
GOSI contributions are deducted from an employee’s salary before it is paid, and the organisation also tracks payments and benefits to ensure that the correct amount of money is being provided. This allows them to provide a range of high-quality services to their members, as well as to ensure compliance with Bahrain regulations and standards.
Overall, GOSI contributions are an important part of any employee’s salary in Bahrain, as they facilitate access to various benefits and services provided by the organisation. Hence, it is essential for employees to be aware of their GOSI contribution rates before entering a job contract for better future planning.
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Registering a Company and Establishing an Entity in Bahrain
It is a complex process. It requires careful attention to detail and strict adherence to regulations set out by Bahrain’s government. A key component in this process is anticipating, understanding and preparing for contributions to GOSI (General Organisation for Social Insurance) as part of the company’s registration requirements.
GOSI contributions are calculated and paid on a monthly basis. The calculation of GOSI contributions depends on the employee’s monthly salary, with employers required to pay a minimum amount per employee regardless of the individual’s income. Employers must also withhold duties from an employee’s salary that are due to be paid as GOSI contributions by the employee. Employers are also responsible for filing the monthly GOSI contribution returns and paying the contributions due in full.
Failure to make the necessary payments or file accurate information when registering a company and establishing an entity could result in significant fines, penalties, or other legal action from Bahrain’s respective authorities. In order to avoid any complications with GOSI, it is important to ensure that all necessary information and calculations are correctly submitted from commencement. When registering a company and establishing an entity in Bahrain, it is ideal to outsource expert advice to compute GOSI contributions and to meet compliance standards.
How to Calculate GOSI in Bahrain?
GOSI calculation in Bahrain is done using the following formula: Total salary/26 x GOSI rate. The total salary is defined as basic pay and allowances, minus any deductions for social insurance payments or other contributions from the employee’s salary. The GOSI rate is determined by the rule of law and is currently set at 11% of the employee’s salary.
The GOSI calculation varies depending on the employer and employee; some employers may deduct an additional 1.5% from the salary as an administrative fee. Additionally, employees who have worked for more than 3 years in Bahrain may be eligible for a 0.5% contribution reduction on their GOSI. It is important to note that GOSI contributions are deducted on a monthly basis, regardless of the frequency of the salary payment.
Employers are responsible for registering their employees with GOSI and submitting the required forms and payments on time each month. Furthermore, employers must keep detailed records of GOSI contributions in order to provide accurate reports to the Ministry of Labour and Social Development.
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By understanding how to calculate GOSI in Bahrain, employers can ensure that their employees are properly registered with the scheme and that their contributions are being paid on time. This helps to protect employees’ rights and ensures that all workers receive their due benefits. Payroll Middle East is the leading Payroll outsourcing company in GCC and we also assist employers in better managing their finances and staying compliant with local regulations and standards.
With a vast experience of 10 years, Jean Rodas is a specialist in managing all aspects of Payroll and HR. Within Payroll, she has comprehensive knowledge in areas such as computation of final settlement, payslips, WPS registration, salary transfers, leave trackers, and end of service benefits among others, which she has successfully carried out for clients from diverse industries.