Understand Local Rules for Businesses in Oman
There are a few rules and regulations that every foreign investor should comprehend before investing in Oman. Here are the highlights.
- Employment law. Companies operating in Oman are subject to RD No. 35 of 2003. A foreign worker can’t be employed without the approval of the Ministry of Manpower and without obtaining a permit to work in Oman. Oman has had a very active Omanization programme for several decades. The Ministry of Manpower specifies Omanization quotas for various sectors. It is critical to understand if your business sector is subject to a quota. A 17.5% social security contribution applies to Omani nationals but not to foreign employees.
- Taxation. Oman has a 15% tax on businesses with incomes more than OMR 100,000. Special rules apply to the taxation of income derived from the sale of petroleum, where rates can be as high as 55%. A customs duty of 5% applies to most non-GCC source goods; however, special exemptions exist for medical supplies and other essential items. Businesses must apply a rate of 5% VAT to most goods and services supplied in Oman.
- Property ownership. Land ownership in Oman is subject to Royal Decree 5/1980. This specifies that all land in Oman is the property of the state unless otherwise specified. For the most part, foreign companies have limited leases on land as opposed to full permanent ownership.
Benefits of Getting a Local Business License in Oman
There are many benefits to getting a local license; here are some highlights:
- Tax residency. All local license holders can apply for Oman tax resident status.
- Local tenders. Many government tenders are only open to businesses with local business licenses. You will be able to bid for lucrative tenders that will expand your business. The government is responsible for a large proportion of spending in the country.
- Future proof your business. Many entrepreneurs start in free zones because they believe it is the only type of license that will give them full ownership, but with the revisions in the law, you can get full ownership with a local license.
- Free trade with the USA. Thanks to a special free trade agreement between the US and Oman, trade between the countries is not subject to tariffs.
The fees are around OMR 3,500, covering the Ministry of Commerce and Industry, Chamber of Commerce, Ministry of Finance & Ministry of Manpower fees. These are subject to increase depending on the new company’s proposed share capital.
Incorporation Physical Presence Needs
Shareholders do not have to be physically present in Oman for the incorporation process of a company.