Oman FAQs

What are the first steps I should take to set up a business in Oman?

We recommend that you create a business plan to understand your company requirements. For example: What are your company’s activities going to be? Who is your target market? Where will you likely be located? How many staff will you require? What is your timeline? All these questions are essential to understanding how to help you.

What is the difference between a freezone and mainland company in Oman?

Mainland Company

A mainland establishment in Oman is an onshore setup, licensed by the Ministry of Commerce and Industry (MOCI). An onshore establishment is allowed permitted to conduct business in the local market as well as outside Oman without any restrictions.

Freezone Company

A Free Zone business in Oman is incorporated within a designated jurisdiction of a certain Freezone where the company is only allowed to conduct business inside the same Freezone or outside of Oman. Oman free zone companies are allowed to trade within Oman mainland without a local agent, however customs duty of 5% applies in these cases.

What type of business entity would be suited for me based on my company activities in Oman?

Dependent on the activities and shareholding composition, foreign companies can be incorporated in the following most common legal forms:

  • Sole Proprietorship (owned by one person, available to Omanis, GCC and US nationals)
  • Limited Liability Company or LLC (owned by two or more individuals or corporates)
  • Branch of a Foreign Company (100% owned by a foreign company, Government project required)
  • Representative Office (100% owned by a foreign company, no commercial business allowed)

Will I require a physical office in Oman, or can the company be registered against a virtual office?

Once the new company is registered with the Ministry of Commerce and Industry and Commercial Registration is issued, a physical space has to be rented and lease agreement obtained in order to apply for company’s Municipality (Trade) Licence.

The same rule applies for Oman Free Zones with the requirement to rent space within the Free Zone where the new company will be incorporated.

The size of your office will broadly dictate the number of staff you can have and some activities will need specific office types and locations.

A new company in Oman cannot be registered against the virtual office.

How long does it take to set up a company in Oman?

Generally, it takes from 1 to 3 weeks, depending on the jurisdiction, legal structure, shareholding and any additional third-party approvals if required.

Can a foreigner own 100% of a company in Oman?

GCC companies that are 100% owned by GCC nationals, or GCC nationals themselves, may establish a company without a local partner for approved activities. Pursuant to a free trade agreement (FTA) concluded between the US and Oman, US persons may form an entity in Oman without a local partner, provided that all the shareholders are US persons.

Is dual residency permitted in Oman for other GCC country visa holders?

Yes, but it is only permitted for the business owners.

Do I need a company bank account for my business in Oman?

Yes, whilst it is not a mandatory requirement for new companies without staff, it is strongly advised that you look to open a local Oman company bank account as soon as possible. It is beneficial not only for local business transactions but also once a company does have staff they will be required to be paid through the WPS banking system. Failure to do so will result in a block against the company. There are many local Omani Banks to choose from most of which offer competitive commercial rates.

What are the taxes payable in Oman?

Income tax – 15% (3% for certain small tax payers) and Withholding tax – 10% (maybe reduced or eliminated by a applicable double taxation agreement). Tax exemptions are available only for industrial (manufacturing) activities.

What taxes are payable in Oman?

Income tax – 15% (3% for certain small tax payers) and Withholding tax – 10% (maybe reduced or eliminated by any applicable double tax agreement). Tax exemptions are available only for industrial (manufacturing) activities.

What is Omanisation?

Omanisation is a policy enacted by the Government of Oman aimed at replacing expatriate workers with trained Omani Personnel. Specific quotas are set by the country within certain industries determining the percentage of Omani to foreign workers required. This is something to be taken into consideration when hiring staff under the new entity.

Why do I need an Omani-national sponsor? What are my options?

If you are aiming to set up an Oman Mainland LLC then you will need to have an individual Omani national or a 100% Omani owned company as a partner or sponsor in order to register the business.

Under the Oman’s Commercial Companies UAE Law, with an LLC structure, 30% (some activities require 51%) of the shares need to be owned by your local Omani individual or corporate partner, this however does not relate to proportion of profits. An agreement with your local partner can stipulate that the majority of the profits and management control is retained by the Foreign Party owning 70% (or 49%).

How do I chose the Share Capital and Grade of company in Oman?

Whilst registering a limited liability company (LLC) in Oman, clients often enquire about the share capital requirements and the ‘grade of the company’ and how does the grade specified by the MOCI benefit the LLC in Oman.

The Ministry of Commerce and Industry (MOCI) specifies the following grades for an LLC in the Sultanate based on the company’s capital.

The grades for companies are as follows:

GradeShare Capital OMR
Excellent250,000 +
First100,000 to 249,999
Second50,000 to 99,999
Third25,000 to 49,999
Forthup to 24,999

Whilst the minimum capital requirement of a wholly-owned Omani Company is RO 20,000, the MOCI grants an excellent grade company certain benefits over other grades.

100% Foreign Owned LLCs in Oman

As from January 2020, foreign citizens, companies and investors in Oman are now able to own 100% of their businesses in many industries in mainland Oman. Some activities in the mainland are still reserved for Omanis, and other activities still require a local Omani partner with a minority shareholding.

For more details on setting up a 100% foreign owned LLC in Oman see our detailed article below

www.propartnergroup.com/blog/2020/02/foreign-owned-company-in-oman/

Benefits of the various Company Grades in Oman

The benefits of an excellent grade company are based on the MOCI, Ministry of Manpower (MOM) and Tender Board practice and their internal policy and regulations. Therefore, there is no direct law or provision that defines the benefits and limitations applicable to the grades for companies.

The potential advantages for an excellent grade company as against lower grade companies are as follows:

  1. An Omani company registered in the excellent grade category would be allowed to bid for any tenders produced by the Tender Board in Oman. Some tenders are restricted so as to only allow excellent grade companies to bid.

  2. Excellent grade companies are granted larger quotas of foreign employees. MOM will expedite the process for granting expatriate employees clearances for companies in the excellent grade category.
    All other grades of company are also entitled to expatriate employee quotas, but they are not be granted the same special treatment that applies to excellent grade companies.

    Omanisation applies to all companies in Oman, the specific Omanisation requirements are in accordance with the commercial activity of the company and the job designations of the staff.

  3. MOM has placed restrictions allowing foreign workers to take on certain categories of job title. Some of these decisions are only applicable to commercial entities registered as first, second, third or fourth grade companies and therefore excellent grade categories and branches of international companies can be exempt from these Omanisation requirements.

So there are significant benefit to being an excellent grade company in terms of expedition of applications – labour quotas, visas and clearances, as well as general benefits regarding the employment of expatriates and Omanisation.

The decision to increase the capital of a company to OMR 250,000 is a commercial decision and should be taken on the basis of the business and operations of a company as well as its capital requirements and its manpower requirements.

How can PRO Partner Group Help?

If you need assistance in setting up or restructuring your company in Oman, any other staffing, visa, local partner or PRO support matter in Oman, Abu Dhabi, Dubai, the wider UAE or Qatar, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.

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