Determining whether to conduct business in Oman as a foreign entity or to establish a Limited Liability Company (LLC) is a common consideration. If you are seeking guidance on this matter, continue reading this blog post for insights.
Typically, the preferred approach is to form a Limited Liability Company with an Omani, American, or GCC national serving as a passive shareholder. However, it is also possible to establish a fully foreign-owned company, provided that certain government criteria are satisfied or if the company is registered in one of the designated free zones within the country.
Setting up a Company in Oman with a Local Entity
There are five categories of local entities available for business establishment in Oman:
1. Sole Proprietorship in Oman
A sole proprietorship, also known as a one-person company, can be established with a single director and does not require any minimum paid-up share capital. This structure is anticipated to be the most popular choice among foreign investors due to its straightforward corporate framework.
2. The Oman LLC
A Limited Liability Company (LLC) limits each shareholder's liability to their respective share in the company's capital. To establish an LLC in Oman, a minimum of two shareholders is required, with at least one being a GCC national or an American who holds a minimum of 30 percent of the company's shares. Additionally, one director is needed, who may also be one of the shareholders.
The Omani LLC is the preferred business structure for foreign entrepreneurs looking to set up operations in Oman, requiring a minimum capital of 150,000 Omani Riyals, equivalent to approximately USD 390,117*. This entity type is particularly advantageous for manufacturing and trading ventures.
3. The Wholly Foreign-Owned LLC
Foreign investors aiming to establish a company with complete ownership must obtain authorization from the Ministry of Commerce and Industry, in accordance with Omani regulations. To secure this approval, the company is required to present a comprehensive business plan that outlines the capital investment and anticipated contributions to the national economy, including the number of local jobs expected to be generated.
Additionally, the company must consist of a minimum of two shareholders and one director, with a required minimum capital of one million Omani Riyals, which is approximately USD 2,600,780*.
4. The Oman Free Zone Company
Establishing an Oman Free Zone Company involves meeting three essential criteria: I. full foreign ownership; II. the ability to engage in business with local clients; and III. no minimum investment requirement.
Free Zones are particularly advantageous for manufacturing firms looking to use Oman as a strategic hub for expanding their operations throughout the Middle East.
5. The Joint Stock Company
A Joint Stock Company that publicly trades its shares is known as a Public Joint Stock Company (SAOG). This type of company must maintain a minimum share capital of OR 150,000, which is approximately USD 390,117*.
In contrast, a Joint Stock Company that does not publicly offer its shares is termed a Private Stock Company (SAOC) and requires a minimum capital of OR 50,000, roughly equivalent to USD 130,000. Additionally, this company must have at least three shareholders, with one being an Omani national who must hold 30 percent of the total shares.
Any Joint Stock Company, irrespective of its classification and involving foreign national participation, must complete two essential steps: obtaining approval from the Ministry of Commerce and Industry and ensuring a minimum capital of OR 150,000, approximately USD 390,117*.
6. The Limited Partnership (LP)
A Limited Partnership (LP) is a type of commercial entity that necessitates at least one general partner and one limited partner for registration. It functions as a modified form of general partnership.
In this structure, a limited partner's liability for the partnership's debts is confined to the amount of capital they have contributed, while the general partner bears full liability for the partnership's obligations. The Omani general partner is responsible for registering the limited partnership with the Oman Commercial Register.
Starting a Business in Oman with a Foreign Entity
There are three categories of foreign entities.
1. Branch Office
This is an extension of an international corporation that has entered into a contract with the government or one of its agencies, allowing it to register and operate a foreign branch in Oman.
To establish a branch office in Oman, approval from the Oman Ministry of Commerce and Industry is necessary, and the license is valid solely for the duration of the specific project. The Ministry mandates a bank guarantee of USD 390,000 for this process.
2. Representative Office
The Omani representative office is entirely foreign-owned and managed; however, it is prohibited from engaging in direct sales within Oman. Its functions are restricted to conducting market research and promoting the parent company’s business.
3. Commercial Agency
A foreign entity looking to engage in business activities in Oman, without the intention of establishing a local branch or company, is allowed to operate through local commercial agents.
It is necessary to register the agreement with the local agency with the Oman Ministry of Commerce and Industry. Clients utilizing commercial agencies are still obligated to submit corporate income tax and annual tax returns for their income generated in Oman.
Justifications for Engaging Professional Services
Business owners aim to optimize their time for maximum productivity. Consequently, they prioritize several factors that lead them to delegate tasks to professional specialists.
Tasks are accomplished more efficiently. Records are kept in an organized and professional manner. The legal documentation process is expertly managed. This approach alleviates the workload for business owners and investors. Available resources can be utilized in the most effective way.
At Innovative Digital, we are a dedicated team of professionals committed to assisting a diverse range of businesses in realizing their aspirations. We collaborate with various organizations, from emerging start-ups to established multinational corporations.
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
What are the foreign entities with which you can set up your business in Oman?
There are three types of foreign entities:
- Branch office
- Representative office
- Commercial Agency.
Who can start a business with a commercial agency in Oman?
A foreign entity looking to engage in business activities in Oman, without the desire to establish a local branch or company, is allowed to operate through local commercial agents.
What are the local entities with which you can set up your Omani business?
There are five types of local entities:
- Sole Proprietorship
- Limited Liability Company
- Free Zone Company
- Joint Stock Company
- Limited Partnership.
Why should an entrepreneur avail professional service?
Professional services should be utilized for several reasons:
- Tasks are executed more efficiently.
- Records are kept in an organized and professional manner.
- The management of legal documentation is effectively addressed.
- The workload on business owners and investors is significantly reduced.
- Available resources can be leveraged for maximum productivity.
What are the requirements for a wholly foreign-owned LLC in Oman?
The company is required to have a minimum of two shareholders and one director, along with a capital requirement of at least one million Omani Riyals, which is approximately equivalent to 2,600,780 USD.
