If you're considering starting your own business but are unsure of the ideal location, consider setting up in Oman. With its flourishing economy and favorable business environment, Oman provides the perfect conditions for businesses to thrive. Take a look at our comprehensive guide on how to set up a business in Oman, covering everything from legal requirements to the numerous compelling reasons to invest in the country. Whether you're a budding entrepreneur, a seasoned investor, or a seasoned business owner, establishing a company in Oman is sure to be a lucrative venture for you.
About Oman
Oman, the third-largest country on the Arabian Peninsula, has a rich history of entrepreneurship and international trade. Its maritime trade once extended to the shores of China, Europe, and Africa.
In 1970, Sultan Qaboos Bin Said took control of Oman and remained in power until his passing in 2020. He served as a constant source of inspiration for foreign businessmen interested in establishing their businesses in Oman. Thanks to his visionary leadership, the country underwent rapid socioeconomic development while preserving its cultural heritage.
While Oman's economy has greatly benefited from its oil and gas reserves, Sultan Qaboos implemented a progressive economic development plan focused on industrialization and diversification. This plan aimed to attract foreign investors to set up businesses in Oman and, more importantly, reduce the country's dependence on these resources.
Oman has emerged as a highly sought-after business hub, particularly for logistics and trade in the Middle East, due to its strong economic foundation and modern commercial infrastructure. The government's signing of significant international trade agreements has enhanced opportunities for small and medium-sized enterprises and attracted increased foreign direct investment.
The development strategy of Oman aims to decrease the contribution of the oil industry to the GDP through industrialization, privatization, and diversification of businesses. The introduction of the future vision has received the approval of His Majesty Sultan Haitham bin Tarik.
The "Oman Vision 2040" serves as the blueprint for the Sultanate's social and economic development. Implemented in 2021, this plan will continue until 2040. Aquaculture, tourism, mining, shipping and logistics, and manufacturing are the key pillars of the government's diversification policy.
Benefits of Business Setup in Oman
The government of Oman actively seeks foreign entrepreneurs to engage in business activities within the country. It consistently promotes foreign direct investment and offers a range of incentives and free zones to foster a favorable economic environment for businesses. Oman presents abundant untapped investment opportunities across various industries such as logistics, tourism, fisheries, mining, and manufacturing.
Oman provides foreign investors with a multitude of choices to establish themselves as enduring commercial and investment partners, enabling them to invest in local business setups. In addition to these opportunities, there are several advantages to setting up a business in Oman.
A Booming Economy
Oman is renowned for its forward-thinking approach and strong desire for rapid economic advancement. The country's commitment to market liberalization has opened up exciting opportunities for foreign investors. Regardless of their industry, business owners and investors can explore the potential that Oman has to offer. Some of the key sectors in Oman include logistics, tourism and travel, construction, hospitality, manufacturing, education, oil and gas, and food processing.
International Presence
Oman maintains connections with various international economic organizations. Notably, it holds membership in the WTO, GAFTA, and GCC, alongside free trade agreements with Switzerland, the United States, Iceland, Norway, Singapore, and numerous other nations.
Holds a Strategic Position
Oman boasts a coastline stretching over 1700 km, positioning it as a prominent hub for maritime trade worldwide. Serving as a vital gateway to both the Indian Ocean and Arabian Gulf, it facilitates global connectivity. Moreover, its strategic location allows easy access from neighboring nations such as Bahrain, the United Arab Emirates, Saudi Arabia, Qatar, and others. Consequently, when entrepreneurs opt to extend their business operations to nearby countries, it proves to be a lucrative endeavor for them.
Transparent Legal System
Doing business in Oman offers another advantage, as the country boasts a welcoming and transparent legal system that fosters a favorable business climate.
Availability of Talented Individuals
The country boasts a population of 5.4 million (as of May 2023), with a significant proportion being of working-age. This advantageous demographic allows business organizations to readily access a pool of skilled professionals who can greatly enhance corporate productivity. Moreover, the country exhibits a firm hold in the realm of research and development (R&D).
Robust Infrastructure
Oman stands out as one of the countries making rapid progress in infrastructure development. The government's proactive approach facilitates smooth operations for companies. Moreover, the country holds a strong position in terms of its well-established road, sea, and airport networks.
Business-Friendly Country
The implementation of the strategic business process has solidified the region's reputation as a favorable destination for businesses. Through this, a strong business network has been established with neighboring countries. Additionally, the state has entered into over 35 Double Taxation Agreements (DTAs), enabling investors and entrepreneurs to engage in tax-free transactions with more than 35 countries.
Tax Exemption
The process of legally incorporating a business involves various levels of paperwork clearance, which can be challenging if you are unfamiliar with them. However, by outsourcing incorporation services to a third party, you can alleviate unnecessary stress and focus on developing business plans and strategies. This allows companies to effectively utilize their available resources and time.
Required Documents to Set Up a Business in Oman
- Business registration form duly filled
- Articles of Association and Memorandum
- Shareholders' visas and passports
- Certificate of Initial Deposit
- Chamber of Commerce and Industry affiliation certificate
- Shareholders' identity cards
- Tax registration certificate
Prerequisites for a Company Formation in Oman
To register a company in Oman, you must meet the following requirements:
- A minimum capital of OMR150,000 is mandatory.
- You need at least one director, regardless of their nationality.
- A registered office address is required.
- A minimum of two shareholders is necessary.
Oman Company Registration Process
The process of establishing a business in Oman requires completion of several essential steps. Setting up a business entity in Oman involves establishing a physical presence for the company. The necessary steps for business incorporation in Oman are outlined below.
Step 1: Choose a Business Structure
Selecting the appropriate business entity structure is crucial when incorporating a business in Oman. The country offers various profitable business entities, including commercial agency, sole proprietorship, representative office, branch office, joint-stock company, and limited liability company.
Step 2: Register a Company Name
To register a business in Oman, you need to submit an application to the Ministry of Commerce and Industry (MOCI) with a unique name that represents your business and its offerings.
However, there are specific guidelines to follow when selecting a company name:
- The name should not incorrectly refer to Oman's geographic regions.
- It should not be identical to competitors' names.
- The name should not include symbols or honors from global, regional, or Arab organizations.
- Offensive names related to content, religion, military, politics, or meaning should be avoided.
- Names containing "Omani" or "Oman" are not permitted.
Step 3. Submitting Incorporation Documents
Once the company name has been approved, it is necessary to submit the authorized signatory form, shareholders' documents, bank certificate, and company constitution to the Ministry of Commerce and Industry (MOCI).
Step 4. Opening a Capital Account
After the submission of the required documents, the initial incorporation fee must be deposited into a capital account.
Step 5. Registering with the Oman Chamber of Commerce and Industries (OCCI)
Once the registration with MOCI is completed, it is essential to register your business with OCCI to ensure compliance with all relevant commercial rules and regulations.
Step 6. Business Registration
To register the business, the following documents need to be submitted to the authorities:
1. Share Capital Certificate
2. Legalized Opening Forms
3. Municipality Approval
Step 7. Obtaining Approvals from Government Authorities
For company registration in Oman, it is necessary to obtain various approvals from the relevant authorities. The specific approvals required may vary depending on the type, size, and nature of your firm. Some of the approvals include:
1. Registration with the Public Authority of Social Insurance
2. Tax registration
3. Registration with the Ministry of Manpower
4. Registration with Oman Police
5. Industrial, environmental, and other permits and licenses
6. Municipality License
7. Oman police registration
8. Import Export license, if applicable.
Step 8. Creating a Company Seal
The LLC's registered authorized signatory is responsible for designing and issuing a corporate seal.
Step 9. Post-Registration Process
Once the company registration is complete, all submitted documentation must be received.
Step 10. Applying for Visa
Following the incorporation procedure, the next step involves applying for Oman visa services for all employees.
Step 11. Employee Registration
In order to be officially recognized as an integral part of the business entity, employees must be registered under the company name.
Step 12. Converting the Bank Account
To facilitate successful and convenient commercial transactions, the business capital account needs to be converted to a current account.
Things to Consider When Setting Up a Company in Oman
Consider these factors when establishing a company in Oman:
Business Factors
Oman is a member of both the Arab League and the Gulf Cooperation Council (GCC). The country's Commercial Law, which is similar to that of other Middle Eastern nations, governs business affairs. Oman has implemented robust economic policies to attract foreign investment across various industries.
While investing in Oman may seem appealing for foreign businesses in certain sectors, there are bureaucratic challenges to overcome. These include difficulties in obtaining permit clearances and visas for foreign workers, as well as bridging the gap between the public and private sectors. Foreign businesses often have to navigate Oman's Omanization policy, which sets quotas for Omani nationals in most industries.
The choice of investment vehicle for a foreign company will depend on factors such as the target market, the product or service offered, and whether manufacturing or importing will be involved.
Additionally, consider the following:
- Existing trade relationships or agreements
- The specific type of business and industry
- Nationality of individuals or headquarters
Location
One more factor to consider is the geographical location. Regulations, costs, and accessibility can differ across various regions and cities. Despite its small size, it is recommended to seek advice from professionals who specialize in your specific requirements, such as legal or business advisors, accountants, and others.
Language
Arabic is the official language in Oman. In addition to Arabic, other languages like Urdu, English, Baluchi, and certain Indian dialects are also spoken. As business transactions are predominantly conducted in English, Arabic, or a combination of both, English is widely used in the business community and is often taught in schools from an early age.
Business Climate in Oman
There are no restrictions on establishing a business or conducting business activities in Oman, except for a few specific services and trades. The proposed revised Foreign Capital Investment Law (FCIL) RD 50/2019 will now allow 100% foreign ownership of Omani businesses.
Among the 37 business activities that cannot have 100% foreign ownership are taxi services, photocopying and translation, rehabilitation centers, automotive and vehicle repairs, salon and hairdressing services, sale of drinking water, fishing, and tailoring. However, these restricted services only make up a small portion of Oman's economy.
The new law aims to attract foreign companies by opening up promising business sectors for 100% foreign investment. The Ministry of Commerce and Industry (MOCI) has taken steps to modernize and facilitate investor-friendly regulations under the new FCIL.
The new FCIL law does not include a minimum share capital requirement, which could significantly impact foreign investment in Oman. The MOCI has recently relaxed the previous rule of a minimum starting share capital of OMR 150,000 for companies with foreign owners. However, it is important to note that this regulation may require reconfirmation from the MOCI depending on the specific case.
Overall, the new FCIL law marks a significant milestone in Oman's modernization and globalization efforts, offering numerous opportunities for foreign business communities.
Free Zones in Oman
Two special economic zones and three free zones have been established in order to attract foreign investment into the country. Each zone offers incentives such as 100% foreign ownership, tax holidays, waivers of initial capital requirements, and import duty exemptions to lure investors.
Free Zones
The free zones in Oman include:
- Al Mazunah free zone
- Salalah free zone
- Shohar free zone.
Additionally, there are eight industrial estates, namely Sohar, Rusayl, Raysut, Nizwa Al Buraimi, Sur, Al Muzanah, and Sumail. These zones and estates provide attractive incentives such as tax holidays, favorable land rents, and exemptions on equipment and machinery.
Special Economic Zones (SEZ)
- Knowledge Oasis Muscat
- Duqm SEZ
Types of Companies in Oman
Investors should have a good understanding of the available business setup options in order to establish a business in Oman. There are several legitimate business entities that can be chosen to initiate business operations in the country.
Limited Liability Company (LLC)
In an LLC, the liability of a shareholder is limited to the number of shares they own. International investors often prefer to form an LLC in Oman.
To establish an LLC in Oman, there must be at least two shareholders. One of them should be a GCC citizen, an Omani native, or a US citizen who owns more than 30% of the business shares. The registration of an LLC requires a minimum capital of 150,000 Omani Riyals (OR), and there must be at least one director.
Public Joint Stock Company
Public joint stock companies distribute capital through stocks. The shares of a publicly listed joint stock company can be bought and sold in Oman. To establish such a corporation, a minimum share capital of 150,000 OR is required. The incorporation of a joint-stock firm involves obtaining approval from the Ministry of Commerce and Industry and obtaining a license from them.
Private Joint Stock Company (PJSC)
Shares of a private joint-stock company are not traded on a public market. To form a private joint-stock company in Oman, a minimum of three shareholders is required. One of the shareholders must be an Omani national holding at least 30% of the firm's shares, with a minimum share capital of 50,000 Omani Riyals.
Limited Partnership
In Oman, a limited partnership necessitates a minimum of two members. A registered limited partner and a registered general partner are mandatory for this legal structure. The limited partner is liable for obligations and debts up to the extent of their limited shares in the partnership. The general partner must be an Omani citizen and is fully responsible for all partnership obligations and debts without any restrictions.
Holding Company
A holding company is a corporate entity that possesses a majority stake of 51% in a limited liability company or one or more joint-stock companies. It is recommended for significant investments or business ventures to establish a holding company.
Tax Exemptions
The following entities are exempt from paying income tax in Oman:
1. Foreign companies working on government projects
2. Omani marine companies
3. Dividends received from an Omani company
4. Profit earned by the disposal of Securities listed in the Muscat Stock market
5. Investment funds
6. Foreign airlines
7. Foreign companies engaged in activities related to the exploration of oil and gas
Personal Tax
There is no personal income tax to be paid in Oman.
Withholding Tax
Cross-border payments are required to pay a flat rate of 10% withholding tax on the gross payment in Oman. The payments include:
- Provision of services
- Consideration for computer software
- Management fees
- Royalties
- Consideration for R&D
Indirect Tax
Oman does not have property tax, VAT, or sales tax. However, a 5% VAT was implemented in April 2021. Real estate transactions are subject to a 3% stamp duty, and a 5% import duty is imposed on all imported goods.
FAQs
How much does it cost to open a business in Oman?
The expenses associated with starting a business in Oman are subject to variation due to a range of factors and can differ from one situation to another.
Which business is best for Oman?
Top industries in Oman include:
- Mining and Minerals
- Oil and Gas
- Digital Services
- Transportation and Logistic Services
Can I start my own business in Oman?
Yes, you can start your own business in Oman.
Can a foreigner own a company in Oman?
Yes, It is possible for a non-Omani individual to establish ownership of a company in Oman.
Conclusion
Establishing a business in Oman is a simple task. By adhering to the steps detailed in this guide, you can successfully create your company in Oman. We believe that with the guidance offered, you will encounter no difficulties in the process. If you have any queries or require further assistance, feel free to contact the relevant authorities.
