How to Set Up Business in Sultanate of Oman?

An Overview of Sultanate of Oman

Sultanate of Oman, the third-largest country in the Arabian Peninsula, has a rich history of entrepreneurship and global trade that spanned centuries, extending its maritime influence on Africa, Europe, and China. The nation’s economy, originally based on fisheries and agriculture, transitioned to an oil-driven one after significant reserves were discovered in 1964. Under the leadership of Sultan Qaboos Bin Said from 1970 to 2020, Sultanate of Oman experienced rapid socio-economic growth while preserving its cultural heritage and attracting foreign investment. Despite the economic impact of oil, Sultan Qaboos pursued diversification and industrialization to reduce oil dependence, actively encouraging foreign businesses to establish a presence in Sultanate of Oman.

A Booming Economy

Sultanate of Oman is recognized as a forward-looking nation with a proactive approach to rapid advancement. The area has embraced market liberalization, unlocking fresh prospects for international business investors. This region is an ideal selection for entrepreneurs and investors across various sectors. Key industries in Sultanate of Oman encompass:

  • Tourism and Travel
  • Hospitality
  • Construction
  • Manufacturing
  • Oil and Gas
  • Education
  • Food Processing
  • Logistics, and more.

Benefits of Company Formation in Sultanate of Oman

Sultanate of Oman presents a multitude of untapped investment opportunities across industries such as tourism, mining, fisheries, logistics, and manufacturing. The government actively promotes foreign direct investment, offering incentives and free zones to foster a business-friendly atmosphere that attracts international entrepreneurs.

  • Tax Benefits: Sultanate of Oman offers favorable tax policies, including no personal income tax and reduced corporate tax, with double taxation treaty advantages.
  • Import Incentives: No import duties on raw materials and machinery for five years of manufacturing.
  • Repatriation Flexibility: Capital, profits, and dividends can be repatriated without restrictions.
  • Foreign Ownership: Up to 100% foreign ownership in Free Zones and 70% in other regions.
  • Strategic Location: Access to major markets in North America, Europe, Africa, and Asia.
  • Economic Stability: Political stability, controlled inflation, and robust foreign reserves create a secure economic setting.
  • Diverse Industries: Industrial diversity supports efficient business operations through strong supply chains.
  • Infrastructure: Well-developed infrastructure, including transportation and communication networks.
  • Transparent Legal Framework: Business-friendly legal system fosters a conducive environment.
  • Global Engagements: Membership in key economic bodies and free trade agreements amplify international presence.
  • Resource Riches: Abundant reserves of petroleum, gas, copper, gypsum, and more.
  • Accessible Land: Government leases with amenities at discounted rates.
  • Language Advantage: English is widely used in business and commerce.

Business Climate in Sultanate of Oman

Sultanate of Oman remains an appealing destination for businesses, with few barriers to company formation and operations. The anticipated Foreign Capital Investment Law (FCIL) RD 50/2019 aims to allow 100% foreign ownership of Omani companies, except for a select few sectors. Despite the minimal impact of these restricted sectors on Sultanate of Oman’s economy, they open doors for new industries to attract foreign investment. Alongside the Ministry of Commerce and Industry’s modernization efforts, this upcoming law showcases Sultanate of Oman’s commitment to investor-friendly policies.

Notably, the FCIL law also eliminates the requirement for minimum share capital, potentially reshaping the foreign investment landscape. This progressive regulation reflects Sultanate of Oman’s push towards globalization and modernization, promising various opportunities for foreign enterprises to explore and capitalize on.

Types of Companies in Sultanate of Oman and Applicable Requirements

In Sultanate of Oman, there are two primary avenues for business establishment, each further classified by company type and regulatory demands.

  1. Local Company Setup:
  • Proprietorship Company
  • Limited Liability Company (LLC)
  • Free Zone Company
  • Joint Stock Company
  • Holding Company
  • Limited Partnership Company
  • General Partnership Company
  • Joint Ventures
  1. Foreign Entity Involvement:
  • Branch Office
  • Commercial Agencies
  • Representative Office

The popular choice among Omani businesses and foreign investors is the Limited Liability Company (LLC) structure. This typically requires two to forty founding members. Foreign entities are allowed ownership of up to 70% of shares in Omani companies, with the potential for a greater percentage under specific circumstances, like free trade agreements.

Presently, foreign-owned LLCs necessitate a minimum share capital of OMR 150,000, but this requirement drops to OMR 20,000 if fully owned by Omani citizens, GCC, or FTA nationals. Joint stock and holding companies have higher initial capital requisites of OMR 500,000 and OMR 2 million, respectively. Financial institutions typically face even higher capital demands.

Partnership Companies

The characteristics of Omani Partnership companies include:

  • Established by two or more invested parties.
  • Requires registration within one month from the date of enacting the partnership arrangement in the Commercial Register.
  • Demands unanimous consent from all partners prior to the transfer of individual stakes.
  • The partnership’s name must clearly indicate its status as a partnership.
  • Any issues involving a single partner can result in the dissolution of the partnership unless all remaining partners concur to proceed.

Sole Proprietorship

Typically, single proprietorship businesses are exclusively accessible to Omani citizens. GCC nationals might establish a sole proprietorship enterprise under specific circumstances and for designated activities.

Branches of Foreign Companies

Foreign organizations can establish representative offices, albeit with restricted scope. It is advisable for a foreign company to operate a branch solely if it has obtained a government project contract, and this authorization is only applicable during the contract’s duration.

Collaborative Endeavors

A joint venture comes into being through a joint venture agreement involving two or more entities working on a specific project. A joint venture lacks legal recognition and formal registration. The Omani collaborator should possess a minimum of 51% ownership.

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    Process of registering a Company in Sultanate of Oman

    The process of registering a company in Sultanate of Oman is generally uncomplicated and direct. The primary steps involved after the initial capital payment are as follows:

    • Choose a Unique Name: Submit a name application to the Ministry of Commerce and Industry (MOCI) that represents your business.
    • Submit Documents: Once the name is approved, provide shareholder documents, company constitution, bank certificate, and authorized signatory form to MOCI.
    • Register with OCCI: Enroll your company with the Sultanate of Oman Chamber of Commerce and Industries (OCCI) to comply with commercial rules.
    • Create Company Seal: Design a company seal and get it issued by an authorized signatory.
    • Obtain Approvals: Depending on your company’s type and size, obtain necessary approvals from authorities including tax, police, manpower, and permits.
    • Post-Registration: After company registration, collect all required documents as listed below.

    Please keep in mind that the specific requirements may vary based on your business type and evolving regulations.

    Necessary Documentation for Company Registration in Sultanate of Oman

    The process of registering a company in Sultanate of Oman necessitates the submission of the subsequent crucial paperwork:

    • Memorandum and Articles of Association
    • Certificate for Tax Registration
    • Visas and Passports of Shareholders
    • Certification of Affiliation with the Chamber of Commerce and Industry
    • Proof of Initial Deposit
    • Shareholders’ Identification Cards
    • Duly Completed Company Registration Form

    Tax Laws in Sultanate of Oman

    In Sultanate of Oman, taxation involves mandatory registration with the Ministry of Finance for taxable entities. Companies must file a provisional return within 3 months of the accounting period, subject to a uniform 12% tax rate, with profits up to OMR 30,000 exempt. Final tax returns are due within 6 months of the accounting period. Exemptions include dividends, gains from securities, marine companies, airlines, investment funds, and certain foreign firms. Cross-border payments incur a 10% withholding tax on royalties, fees, services, R&D, and software. While Sultanate of Oman lacks VAT currently, a 5% VAT is planned, alongside a 3% stamp duty for real estate and a 5% import duty. Notably, personal income tax is absent in Sultanate of Oman.

    Free Zones

    Sultanate of Oman offers foreign investment opportunities through three free zones (Salalah, Shohar, Al Mazunah) and two special economic zones (Duqm SEZ, Knowledge Oasis Muscat). These zones provide incentives like Tax Holidays, Import Duty exemptions, and 100% foreign ownership. Additionally, eight Industrial Estates offer benefits such as favorable land rents, tax holidays, and equipment exemptions.

    How Migrate World Can Help You

    Migrate World specializes in guiding individuals and families through the entire process of setting up a business in Sultanate of Oman. Our dedicated services encompass every aspect of this journey, ensuring a smooth and successful transition. Our comprehensive suite of services includes:

    • Consultation: Benefit from our seasoned consultants’ in-depth insights into business setup intricacies, empowering you to make informed decisions and find solutions for legal compliance, financial optimization, and strategic choices informed by market research.
    • Business Setup: Our experienced team handles all aspects of establishing your business in Sultanate of Oman, ensuring compliance with local regulations. This allows you to focus on your core activities while we manage legal and administrative requirements.
    • Settlement Services: Transition smoothly to Sultanate of Oman with our support. We assist in finding housing, educational options, and essential services, ensuring your seamless relocation and enabling your business growth.
    • Building Local Connections: We help you to connect with potential partners, suppliers, and clients. Our connections can expedite your business growth.

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