End of Service Benefits (EOSB) — known as end-of-service gratuity or end-of-service indemnity — are statutory lump-sum payments due to employees in the GCC upon termination of their employment. Although calculated on a statutory formula by each country's labour law, EOSB is treated as a defined benefit plan under IAS 19 for IFRS financial reporting purposes.

This means GCC companies preparing IFRS-compliant financial statements — or Indian, European, or US multinationals with GCC subsidiaries — must obtain an independent actuarial valuation of their EOSB liability using the Projected Unit Credit (PUC) method. The liability on the IFRS balance sheet will often differ materially from the statutory liability because the actuarial valuation projects future salary increases and uses a time-value-adjusted discount rate.

Why EOSB Is a Defined Benefit Obligation Under IAS 19

IAS 19 Para 8 defines a defined benefit plan as any post-employment benefit arrangement other than a defined contribution plan. An EOSB obligation meets this definition because:

The benefit amount is determined by a formula — linked to final salary and years of service
The employer bears the actuarial risk — if salaries rise faster than expected, the liability is higher
The obligation accumulates during employment — it is not simply a terminal payment with no current accrual
It is paid on a defined condition (termination) based on a formula outside the employee's control

EOSB Across the Six GCC Countries — Key Differences

Country	Min. Service	Formula (Yr 1-5)	Formula (Yr 5+)	Cap	Special Features
UAE	1 year	21 days basic/year	30 days basic/year	2 years' salary	DEWS (DIFC); Savings Scheme (mainland, voluntary, 2023)
Saudi Arabia	2 years (resignation)	½ month/year	1 month/year	None	New retirement age 65 (July 2025 for new entrants)
Bahrain	1 year	½ month/year (pre-2024)	1 month/year	None	New SIO monthly contribution system (March 2024)
Qatar	1 year	21 days basic/year	21+ days/year	None	No cap; no distinction between resignation and termination
Kuwait	1 year	15 days full salary/year	1 month/year	18 months' salary	Full salary basis (includes allowances)
Oman	1 year	Dual system post-2023	1 month/year	None	Legacy and new system — 1 month/year for new accruals post-July 2023

What We Provide for GCC Clients

IAS 19 actuarial valuation of EOSB — Projected Unit Credit method
Discount rate selection — USD sovereign yield curve (where company's functional currency is USD) or local currency G-Sec equivalent
Full IAS 19 disclosures — DBO movement, service cost, interest cost, remeasurements, sensitivity analysis, maturity profile
Country-specific statutory EOSB calculation for the local balance sheet (where different from IFRS)
Reconciliation of statutory liability vs. IAS 19 liability — clearly documented for group auditors
Bahrain SIO transition accounting — impact of moving from DB to DC for non-Bahraini employees

For Multinational Groups with GCC Subsidiaries

Indian companies with subsidiaries in the UAE, Saudi Arabia, or other GCC countries frequently face a dual reporting requirement — Indian statutory accounts (Ind AS) for the parent and IFRS accounts for the GCC subsidiary or group consolidation. We provide both valuations in a single engagement, with a clear reconciliation of the methodology and assumption differences between standards.

Remote delivery: All GCC EOSB valuations are delivered electronically. Employee data is submitted via secure file transfer; the actuarial report is delivered as a signed PDF within our standard SLA. No physical presence in the GCC is required — and none compromises the quality or independence of the work.

Applicable Standards and Frameworks

Framework	Application
IAS 19 Employee Benefits	Primary standard for all GCC EOSB valuations under IFRS
IFRS for SMEs Section 28	Simplified approach for smaller entities not applying full IFRS
UAE Federal Decree-Law No. 33 of 2021	Statutory calculation basis — UAE mainland
Saudi Labour Law (Article 84)	Statutory calculation basis — Saudi Arabia
Bahrain Edict 109/2023	New SIO system for non-Bahraini employees from March 2024
Qatar Labour Law	Statutory calculation basis — Qatar

Frequently Asked Questions

EOSB is a defined benefit obligation under IAS 19 because the benefit amount is formulaically linked to final salary and years of service, and the employer bears all actuarial risk. The DIFC DEWS scheme and Bahrain's post-2024 SIO system are exceptions — these are defined contribution in nature for prospective accruals, with any pre-conversion accruals remaining as defined benefit obligations.

The discount rate for IAS 19 valuations should reflect the yield on high-quality corporate bonds of duration consistent with the obligation. For GCC entities whose functional currency is USD, the USD sovereign yield curve is commonly used as the reference. Where the companies use local curreny for reporting, yields on local government bonds are used for reference. The appropriate rate is discussed with management and documented in the assumptions memo.

For prospective DEWS accruals (from February 2020), no IAS 19 defined benefit valuation is required — DEWS is a defined contribution scheme. However, any EOSB accrued prior to the DEWS transition date remains a defined benefit obligation and requires actuarial valuation. The two components must be clearly separated in IFRS disclosures.

For Saudi nationals entering the workforce from July 3, 2024, the new GOSI system applies with a statutory retirement age of 65 Gregorian years. This extends the expected service period and increases the projected benefit at retirement. For existing contributors under 50 on July 2024, the retirement age is being phased up from 58 to 65 gradually. We apply the applicable retirement age by employee cohort in our valuations.

Request a GCC EOSB valuation

FIA (UK) qualified actuaries. Remote delivery to all GCC jurisdictions. IFRS-compliant, audit-ready reports within our standard SLA. IAS 19 and statutory basis both covered.

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