Oman: Ministry Mandates Cash Distribution of 8% Service Charge to Hotel and Tourism Staff

Muscat — The Ministry of Heritage and Tourism has issued a new circular spelling out exactly how the 8% service charge collected at hotels and tourism establishments must be handled — and it leaves no room for ambiguity: the money belongs to the staff, not the business.

What the Circular Says

Issued under Article 29 of the Executive Regulations of the Tourism Law, the circular applies to all licensed tourism and hospitality establishments across Oman and took effect on July 30, 2026.

Key requirements include:

• Establishments must continue collecting an 8% service charge on the total amount payable by customers for services rendered.
• The entire amount collected must be paid out in cash to employees — it cannot be counted as business revenue or used for any other purpose.
• Distribution must happen every month.
• Establishments must keep supporting records and prepare a detailed statement showing the total amount collected, who received payments, and how much each employee was paid.
• A copy of this statement must be submitted to the Ministry's Financial Affairs Department.
• Compliance is required with immediate effect.

How Long Will It Apply?

The Ministry noted that this circular is an interim measure — it will remain in force until a dedicated, comprehensive regulatory guide on service charge distribution is issued. Once that guide is published, establishments will need to follow its provisions instead.

Context

The 8% service charge sits alongside a separate 4% tourism fee, both introduced under Oman's tourism law framework. While the tourism fee goes toward the Ministry, the service charge has always been intended for hospitality workers — this circular reinforces that intent and adds accountability by requiring monthly, documented, cash payouts.

Sources: Ministry of Heritage and Tourism circular; reporting by Times of Oman and The Arabian Stories.