Business Setup in Oman – Guide to Set Up a Company in Oman

Are you looking to start your own business but don’t know where to set it up? You can choose Oman as the home for your new company. Oman has a thriving economy and an excellent business environment, which is perfect for businesses to run. Read our guide on business setup in Oman and explore everything you need to know about it, from the legal requirements to the many logical reasons to invest in the country. Whether you’re an aspiring entrepreneur, an experienced investor, or a professional business owner, forming a company here will only prove profitable for you.

About Oman

The third-largest country on the Arabian Peninsula, Oman has a long history of entrepreneurship and international trade. Its marine trade once reached the coasts of China, Europe, and Africa.

In 1970, Sultan Qaboos Bin Said got control of Oman and remained in power until his passing in 2020. He consistently served as a source of inspiration for foreign businessmen interested in setting up businesses in Oman. Thanks to his inspiring leadership, the country experienced a fast socioeconomic development while preserving its cultural legacy.

The country’s economy has been significantly boosted by its oil and gas reserves. But under Sultan Qaboos, the country implemented a forward-looking economic development plan centered on industrialization and diversification to attract foreign investors for business setup in Oman and most importantly, lessen its reliance on these resources.

Oman is a desirable business hub, particularly for logistics and trade in the Middle East, thanks to its solid economic foundation and state-of-the-art commercial infrastructure. Significant international trade agreements that the government of Oman has signed have improved opportunities for small and medium-sized businesses and increased direct investment from foreign countries.

The goal of Oman’s development strategy is to lessen the GDP contribution of the oil industry through industrialization, privatization, and diversification of businesses. The introduction of the future vision has received the approval of His Majesty Sultan Haitham bin Tarik.

‘Oman Vision 2040’ is the blueprint for the Sultanate’s social and economic development. It was implemented in 2021 and will continue till 2040. Aquaculture, tourism, mining, shipping and logistics, and manufacturing are the main pillars of the government’s diversification policy.

Benefits of Business Setup in Oman

The government attracts foreign entrepreneurs to do business in Oman, constantly encourages foreign direct investment, and provides various incentives and free zones to promote a business-friendly economic environment. Oman has many untapped investments and business potential in many industries, including logistics, tourism, fisheries, mining, and manufacturing.

Foreign investors have numerous options in Oman to establish themselves as long-term commercial and investment partners and to invest in local business setups. Other than that, here are some of the benefits of establishing a business in Oman.

1. A Booming Economy

Oman is viewed as a country that is focused on the future and eager to experience rapid economic growth. Market liberalization in the country has created new economic prospects for foreign investors. Business owners and investors from all industries can consider this country. In Oman, a few of the most important sectors are as follows:

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

2. International Presence

Oman is connected to international economic organizations. For example, it has membership in the WTO, GAFTA, and GCC, as well as free trade agreements with Switzerland, the United States, Iceland, Norway, Singapore, and many other countries.

3. Holds a Strategic Position

Oman’s territory has a coastline of more than 1700 km, which helps the country to rank as one of the busiest marine trade routes in the world. It serves as a global entry point to the Indian Ocean and Arabian Gulf. Additionally, the area is accessible from neighboring countries like Bahrain, the United Arab Emirates, Saudi Arabia, Qatar, and more. Later on, when business investors decide to expand their business into nearby countries, it turns out to be profitable for them.

4. Transparent Legal System

Another benefit of doing business in Oman is that the country has a friendly and transparent legal system providing a conducive business environment.

5. Availability of Talented Individuals

With a population of 5.4 million (as of May 2023), the country has a big part of working-age residents. This makes it easier for business organizations to engage qualified professionals who can contribute their best to maximizing corporate benefit. In the field of research and development (R&D), the country also has a strong grip.

6. Robust Infrastructure

When we talk about infrastructure development, Oman is among the countries that are developing most quickly. The Omani government’s initiative enables companies to conduct operations without difficulty. When it comes to the various mediums, such as the road, sea, and airports, the country has a strong position as well.

7. Business-Friendly Country

The region has established itself as a business-friendly zone thanks to the widespread implementation of the strategic business process. It has made a robust business network with its adjacent countries. The state also owns above 35 Double Taxation Agreements (DTAs), which allow investors and entrepreneurs to do transactions with more than 35 countries without having to pay taxes on export or import.

8. Tax Exemption

As there is no personal tax in Oman, business professionals are exempt from paying income taxes. But the country has agreed to implement the VAT services by the beginning of 2021 because it is a member of the GCC region.

It is clear that the legal processes involved in business incorporation include numerous levels of clearance for paperwork. This could prove to be a hard-to-complete procedure if you don’t know about them.

By hiring incorporation services from a third party, you can relieve yourself of unnecessary stress and concentrate more on developing business plans and strategies. In parallel, the resources and time that are available are used by companies in a lucrative way.

Required Documents to Set Up a Business in Oman

• Filled business registration form
• Articles of Association and Memorandum
• Visas and passports of the shareholders
• Certificate of Initial Deposit
• Chamber of Commerce and Industry affiliation certificate
• Shareholders’ identity cards
• Tax registration certificate

Prerequisites for a Company Formation in Oman

The following are the prerequisites for registering a company in Oman:

• Minimum capital of OMR150,000
• Minimum one director (nationality does not matter)
• Registered office address
• Minimum of two shareholders

Oman Company Registration Process

The procedure of registering a business in Oman involves a few steps that must be completed appropriately. The process of company formation in Oman involves giving the business entity a physical foundation. The steps you must take to incorporate a business in Oman are listed below.

Step 1. Select a Business Structure

The selection of an appropriate business entity structure is the first and most important step in the incorporation of a business entity in Oman. The following business entities are profitable in the country:

• Commercial agency
• Sole proprietorship
• Representative office
• Branch office
• Joint-stock company
• Limited liability company

Step 2. Reserve a Company Name

You must submit an application to the Ministry of Commerce and Industry (MOCI) with a specially selected name for your suitable business that brands and highlights your services or goods.

However, there are some guidelines that must be followed when choosing a name for your company which is as follows:

• You cannot choose a name that incorrectly designates the Sultanate of Oman’s geographic division.
• The chosen name cannot be an exact replica of your current competitors.
• You cant choose a name that has a distinctive symbol or honorific in any worldwide, regional, or Arab organization.
• You cannot choose a name that could be offensive in a number of contexts, such as those related to content, religion, the military, politics, or meaning.
• You cant pick a name that contains “Omani” or “Oman.”

Step 3. Submit Incorporation Documents

After the company name has been approved, the authorized signatory form, the shareholders’ documents,  the bank certificate, and the company constitution should be sent to the MOCI.

Step 4. Open Capital Account

The initial incorporation fee must be deposited into a capital account after the documents have been submitted.

Step 5. Registering with the Oman Chamber of Commerce and Industries (OCCI)

After registration with MOCI is done, you must register your business with OCCI to ensure that it complies with all applicable commercial rules and regulations.

Step 6. Register the Business

The following must be submitted to the authorities to register the business:

• Share Capital Certificate
• Legalized Opening Forms
• Municipality Approval

Step 7. Obtaining approvals from Government Authorities

For company registration in Oman, you must receive a number of approvals from the relevant authorities, which may vary depending on the type, size, and nature of your firm. Some of them are as follows:

• Registration with the Public Authority of Social Insurance
• Tax registration
• Registration with the Ministry of Manpower
• Registration with Oman Police
• Industrial, environmental, and other permits and licenses
• Municipality License
• Oman police registration
• Import Export license as appropriate

Step 8. Designing a Company Seal

The registered authorized signatory of the LLC must create and issue a corporate seal.

Step 9. Post Registration Process

All of the submitted documentation must be received after the company registration is complete.

Step 10. Apply for Visa

After the incorporation procedure, the next step is to apply for Oman visa services for all of your employees.

Step 11. Employee Registration

Employees must be registered under the company name in order to be recognized as an integral part of the business entity.

Step 12. Conversion of Bank Account

To make commercial transactions successful and easy, the business capital account must be changed to the current account.

Things to Consider When Setting Up a Company in Oman

You should consider these factors when setting up a company in Oman:

Business Factors

Both the Arab League and the Gulf Cooperation Council (GCC) have made Oman their member. The Sultanate of Oman’s Commercial Law, which is modeled like that of other Middle Eastern countries, governs the business affairs of the country. Over the past few decades, the country has implemented strong economic policies to draw foreign investment into a wide range of industries.

Although investing in Oman looks attractive for foreign businesses in some sectors, there are bureaucratic challenges that they must overcome, such as the difficulty in permit clearances and securing visas for foreign workers and the gap between the public and private sectors. Specifically, many foreign businesses must deal with Oman’s Omanization policy, which establishes Omani national quotas that must be satisfied for the majority of industries.

The kind of investment vehicle a foreign company chooses will depend on the target market, the product or service being offered, and whether manufacturing or importing will be done.

You should also consider the following:

• Presence of existing trade relationships or agreements
• The type of business and industry where that will be conducted
• Nationality of the individuals or headquarters

Location

Another consideration is the location. Rules, prices, and availability may vary between various regions and cities. Even though Oman is a physically small country, it is always advisable to consult with relevant experts depending on your needs, including business or legal advisors, accountants, and others.

Language

The official language in Oman is Arabic. Along with secondary languages, Urdu, English, Baluchi, and some Indian dialects are also spoken. Since business is largely conducted in English, Arabic, or both, English is used extensively in the business community and is also frequently taught in schools starting at a young age.

Business Climate in Oman

There are zero restrictions on forming a business in Oman or conducting business there, with the exception of a small number of services and trades. The proposed revised Foreign Capital Investment Law (FCIL) RD 50/2019 will now permit 100% foreign ownership of Omani businesses.

The following list includes a handful of the 37 business activities that are prohibited from having 100% foreign ownership.

• Taxi services
• Photocopying and translation
• Rehabilitation centers
• Automotive and vehicle repairs
• Salon and hairdressing services
• Sale of drinking water
• Fishing
• Tailoring

However, the restricted services only make up a small portion of Oman’s economy. The new law encourages foreign companies to conduct business in Oman by opening up promising new business sectors to 100% investment from foreign countries.

With the goal of promoting and facilitating investor-friendly regimes in the Sultanate of Oman, the Ministry of Commerce and Industry (MOCI) has adopted promising modernization steps under the new FCIL regulation.

The minimum share capital requirement is not included in the new FCIL law, which could drastically change the environment for foreign investment in Oman. The MOCI has recently eased the previous rule requiring a company with one or more foreign owners to have a minimum starting share capital of OMR 150,000. But being a new regulation, it does require reconfirmation from MOCI depending on the case.

The new FCIL law represents a major step in Oman’s modernization and globalization and will undoubtedly present a wealth of opportunities for business communities of foreign countries.

Free Zones in Oman

For luring foreign investment into the nation, there are two special economic zones and three free zones. 100% foreign ownership, tax holidays, waivers of the initial capital requirements, and import duty exemptions are only a few of the attractions that each zone offers.

Free Zones

Free zones in Oman are as follows:

• Al Mazunah free zone
• Salalah free zone
• Shohar free zone

Eight industrial estates, including Sohar, Rusayl, Raysut, Nizwa Al Buraimi, Sur, Al Muzanah, and Sumail, are also available and offer exceptionally appealing tax holidays, land rents, and exemptions on equipment and machinery.

Special Economic Zones (SEZ)

• Knowledge Oasis Muscat
• Duqm SEZ

Types of Companies in Oman

Investors must be aware of the business setup alternatives in order to establish a business in Oman. The following are the legitimate business entities that can be set up to begin business operations in Oman.

Limited Liability Company (LLC)

The responsibility of a shareholder in a limited liability company is restricted to the number of shares that the shareholder owns. In Oman, LLC formation is primarily preferred by international investors.

An LLC must have two shareholders in order to be formed in Oman. One of them must be a GCC citizen, an Omani native, or a US citizen who owns more than 30% of the business shares. It requires at least 150,000 Omani Riyals (OR) to register an LLC. There must be one director as well.

Public Joint Stock Company

Stocks are used to distribute capital in public joint stock companies. Shares of a publicly listed joint stock company can be bought and sold in Oman. The required minimum share capital to establish such a corporation is 150,000 OR. A joint-stock firm is incorporated after getting the Ministry of Commerce and Industry’s approval and issuing a license from them.

Private Joint Stock Company (PJSC)

A private joint-stock company’s shares are not traded on a public market. A minimum of three shareholders are needed to form a private joint-stock company in Oman. One of the shareholders must be an Omani national with at least 30% of the firm’s shares and at least 50,000 Omani Riyals in share capital.

Limited Partnership

In Oman, a limited partnership must have at least two members or more. One registered limited partner and one registered general partner are required for this legal entity. The limited partner is responsible for the obligations and debts to the extent of his restricted shares in the partnership. The general partner must be a citizen of Oman and be fully held accountable for any partnership obligations and debts with zero limitations.

Holding Company

A holding company is a business entity that owns 51% of the stock in a limited liability company or one or more joint-stock companies. Large investments or business projects are advised to register a holding company.

Tax Exemptions

The following don’t have to pay income tax in Oman:

• Foreign companies working on government projects
• Omani marine companies
• Dividends received from an Omani company
• Profit earned by the disposal of Securities listed in the Muscat Stock market
• Investment funds
• Foreign airlines
• Foreign companies doing 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 need to pay withholding tax at a flat rate of 10% on the gross payment in Oman. The payments are as follows:

• 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. Nevertheless, it made a 5% VAT effective in April 2021.
• Transactions done in real estate are subject to a 3% stamp duty.
• Oman imposes a 5% import duty on all imported goods.

FAQs

How much does it cost to open a business in Oman?

The cost to open a business in Oman varies on various factors and differs from case to case.

Which business is best for Oman?

The best businesses in Oman are as follows:

• 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, a foreigner can own a company in Oman.

Conclusion

It is very easy to set up a business in Oman. You only require to follow the defined process which we have discussed in this guide. We hope after going through this guide, you will be able to form a company in Oman without any issues. In case of any confusion or require any further guidance, you can get in touch with the relevant authorities.