Oman offers a hospitable environment for conducting business. If you seek a nation with contemporary business regulations enabling operations in a competitive market, it serves as a strategic hub bridging the east and west, fostering a highly favorable business atmosphere.
Benefiting from a well-educated, bilingual workforce and advanced transportation networks, investing in Oman stands out as the optimal choice.
Business Culture in Oman
Oman's strategic location at the crossroads of Europe, Asia, and North America makes it an ideal destination for business investment. Situated near the Persian Gulf and the Strait of Hormuz, Oman offers convenient access to key markets in the Gulf, Africa, and the Indian subcontinent.
Understanding the local business culture and being open to new concepts is crucial for the success of any company in Oman. With its high-income status, four free zones, and numerous business opportunities, Oman is a promising location for future business endeavors.
Reasons for setting Foreign Business Investment in Oman
Let's examine the different factors that encourage entrepreneurs to invest in Oman.
1. Ideal Location
Oman's strategic location near the Strait of Hormuz and the Persian Gulf positions it as a key player in the global maritime trade. With its accessibility to the Gulf, the Indian Subcontinent, and Africa, Oman serves as a vital hub for commercial traffic.
In addition to its economic significance, Oman boasts a rich cultural heritage and racial diversity, as well as stunning natural landscapes, including mountains, wadis, and over 3000 km of coastline. These appealing features make Oman an attractive destination for tourists and a prime location for investment opportunities.
2. International Appeal and Lifestyle
Oman boasts a strong international presence with renowned global brands such as Lulu, BP, Shell, Air Liquide, Vale, Jindal Power & Steel, Larsen & Toubro, Rio Tinto Alcan, and Carrefour. Furthermore, the country has established commendable trade agreements as a signatory to WTO, GCC Common Market, GAFTA, and FTAs with various countries including Singapore, the US, Norway, Switzerland, Iceland, and Lichtenstein.
Oman stands out as one of the safest and most secure countries globally, with remarkably low crime rates. Moreover, the cost of city living, including housing and rental prices, is significantly below the regional average in the Gulf.
Due to these factors, Oman is recognized as an ideal location in the Gulf region for raising a family. Compared to other Middle Eastern nations, Oman is home to a diverse expatriate and foreign investor community, constituting nearly half of the country's total population.
3. Hierarchy and Legal System
The predominant management style for business and company registration in Oman's Sultanate is hierarchical, with decisions mostly coming from top-level management and given as direct instructions to staff.
The legal system in the country is based on Islamic Sharia law, with laws continuously updated to provide a flexible framework for business operations. Commercial disputes are resolved in the country's commercial courts.
4. Business Vehicles
The legal framework in Oman provides foreign companies with two essential structures to establish their presence in the country: direct presence through a corporate entity and indirect presence through commercial agents.
Foreign companies have a variety of partnership options available under the Commercial Companies Law of Oman, making investment in Oman an attractive opportunity to consider.
5. Management Structure
LLCs are managed by authorized managers who have the power to legally bind the Limited Liability Company as outlined in the Consumer Report and the LLC's constitutive contract, which is approved by the company's partners or shareholders. These authorized managers frequently designate a manager to oversee the daily operational management of the LLC under their guidance.
Nonetheless, the authorized manager may reside abroad but might need to make occasional appearances before a designated authority in Oman to fulfill specific registrations or tasks.
6. The Tax System – an Important Oman Business Culture
Personal income is currently subject to income taxes in the country. As a result, individuals are not obligated to submit income tax returns, and the notion of tax residency is not currently defined for individuals.
Currently, the primary tax expense for businesses in Oman is the corporate income tax, set at a rate of 15% on all taxable profits. A special provisional rate of 55% is applicable to income generated from the sale of petroleum.
It is recommended to consult with a taxation service firm in Oman. Omani law mandates that Omani employees in the private sector must be insured against disability, death, old age, and occupational injuries and diseases by the Public Authority for Social Insurance (PASI).
Private-sector employers are required to make a monthly contribution to the PASI, amounting to 10.5% of each Omani employee’s basic salary. Non-Omani GCC nationals working in Oman have contributions made to PASI at a rate equivalent to their home jurisdiction, with their home jurisdiction covering any shortfall due to their home benefits being more generous than the Omani scheme.
7. Free Zones
There are three Oman free zones, each established under a special law that outlines the permitted activities and benefits. In general, free zones in Oman allow foreign owners to have 100% ownership of their companies.
Oman provides an investor-friendly legal framework with no restrictions on capital, profits, or repatriation. Foreign investment is allowed up to 70% in most sectors, and up to 100% in certain cases and specific economic zones.
The advantages of operating in Oman's free zones include lower Omanisation requirements, duty-free imports and exports, tax-free holidays, minimum capital investment requirements, and limited restrictions on repatriation of capital, investments, or profits.
The free zones in Oman include SEZD, Salalah Free Zone, Sohar Port Free Zone, and Al Mazunah Free Zone.
8. No Custom Duties on Exports
Oman is a member of the Gulf Cooperation Council (GCC) Union, which is currently working on implementing the GCC Customs Union established in 2003. The Customs Union aims to eliminate customs and trade barriers among GCC member states.
The GCC states follow a Common Customs Law and a Unified Customs Tariff, with a standard custom duty rate of 5% on goods' cost, freight value, and insurance, except for tobacco and alcoholic goods which are subject to a 100% customs duty rate.
9. Oman's Talent Pool and Economy
Oman boasts a youthful, diverse, and well-educated workforce ready for the demands of the modern era. The country offers highly competitive salary packages compared to other Gulf nations, with a population of 4.3 million and 1.7 million workers, along with over 239,000 registered companies.
The Omani government is dedicated to decreasing its dependence on oil revenues through diversification, industrialization, and privatization efforts. Oman is strongly committed to fostering economic variety and attracting investments. Additionally, the nation possesses a cutting-edge telecommunications infrastructure that facilitates seamless connectivity both locally and internationally.
10. Oman's Vision 2040
Oman has taken steps to enhance various sectors such as tourism, hospitality, technology, transportation, fragrance, and mining, in addition to the moderately developed oil and gas industries. Consequently, the country is projected to experience a significant economic growth of 31 billion riyals by 2040.
How Do We Help?
Now that we have comprehended the various reasons why investing in Oman is a crucial decision, it is imperative to ensure that the procedures for company incorporation are carried out seamlessly and without any hitches. Therefore, seeking professional guidance, such as consulting an agency like Innovative Digital, is highly recommended.
We, at Innovative Digital, are a skilled team committed to providing a diverse range of services for business setup, including incorporation, accounting, taxation, and visa services.
Feel Free To Reach Out To Us For More Information On Business Setup In Oman With Innovative Digital . Our Dedicated And Experienced Team Will Respond To Your Inquiry Within The Next 24 Hours. Call Or Whatsapp Us +968 7110 6867 Or Email: Info@innovativedigital.om
FAQs
How does the ideal location of Oman facilitate foreign investment?
Oman is strategically located near the Strait of Hormuz and the Persian Gulf, making it a key player in the global maritime trade. With its close proximity to the Gulf, the Indian Subcontinent, and Africa, Oman serves as a vital hub for international commerce. In addition to its economic significance, Oman boasts stunning natural landscapes, including majestic mountains, picturesque wadis, and over 3000km of pristine coastline.
How is the lifestyle in Oman?
Oman boasts one of the lowest crime rates globally, making it one of the safest and most secure countries. Furthermore, the cost of city living, including housing and rental prices, is significantly below the regional average in the Gulf.
Which are the focused sectors for Oman Vision 2040?
Oman has taken steps to enhance various sectors such as tourism, hospitality, technology, transportation, fragrance, and mining industries in addition to the moderately developed oil and gas industries.
What are the benefits of Oman Free Zones?
Free Zones typically enable foreign investors to retain full ownership of their businesses. They offer reduced Omanisation obligations, exemption from import and export duties, tax breaks, no mandatory minimum capital investment, and no limitations on transferring capital, investments, or earnings.
What is the corporate income tax rate in Oman currently?
A 15% tax rate applies to all profits that are subject to taxation.
