Foreign participation in companies of the Kingdom of Oman is regulated by the Foreign Enterprises and Investments Act, the Trade Companies Code, the Trade Register Act and the Trade Agencies Act.

Provided that a foreign investor is engaged in importing goods and services to Oman only, in accordance with the Foreign Enterprises and Investments Act, the investor may establish a local company, open a branch or appoint a local sales agent in Oman.

Pursuant to the Trade Companies Law, foreign investors may participate in companies of one of the following organizational and legal forms:

• Joint Stock Company
• Limited Liability Company
• General Partnership
• Limited partnership

As a rule, at least one member of the company to be established must be a citizen of Oman, and at least 35% of the company’s capital must be owned by the Kingdom’s citizens. At least 51% of share capital of companies operating in public transport, utilities and real estate sectors must be owned by Omani citizens.

Joint Stock Company

Joint Stock Company is established by at least three shareholders and characterised as follows:

• minimum charter capital is OMR 25’000 (US$1 is approximately OMR 0.4);
• if the company’s capital exceeds OMR 500’000, or if after incorporation its amount exceeds OMR 500’000, no less than 40% and no more than 70% of shares must be offered for public sale to Omani citizens;
• The number of shareholders is not limited;
• shares of various classes may be issued;
• registration at the the Oman Stock Exchange is required;
• company is managed by the Board of Directors composed of from three to 12 members. Directors are responsible to the company, shareholders and third parties in the event of fraud, negligence or unlawfulness of their actions, and also if they failed to be reasonable under the relevant circumstances.

Limited Liability Company

Limited Liability Company is established by at least two shareholders and characterised as follows:

• minimum charter capital is OMR 10’000;
• maximum number of shareholders is 30;
• shareholders have pre-emptive rights to purchase shares if they are sold to third parties.
• company is managed by one or several managers who may not be shareholders. Managers are responsible to the company, shareholders and third parties in the event of fraud, negligence or unlawfulness of their actions, and also if they failed to be reasonable under the relevant circumstances.

Both limited liability and joint-stock companies incorporation requires the approval by the Ministry of Commerce and Industry to be followed by registration with the Trade Register of Oman. A company’s name should reflect its goals and show that its shareholders’ liability is limited.

Partnerships

General Partnership is established by at least two members and characterised as follows:

• all partners bear unlimited liability for the partnership’s debts;
• maximum number of partners is not limited;
• partnership is managed by its partners unless otherwise provided for by the partnership agreement. Managing partners may perform all actions required to achieve the partnership’s goals while observing the partnership agreement and limiting themselves to the current law regulations.

Limited Partnership is established by at least two members and characterised as follows:

• each partnership has at least one general partner and limited partners.
• maximum number of partners is not limited;
• general partners bear unlimited liability for the partnership’s debts;
• limited partners are liable only for the capital they paid up provided that they are not involved in the management of the partnership (otherwise they bear unlimited liability);
• partnership is managed by general partners.

All partnerships are required to be registered with the Trade Register of Oman. Each partnership’s name must include at least one partner’s last name and indicate that the organization is a partnership.

IMPORTANT!

Before making a choice, a foreign investor must first obtain the approval of the Foreign Investment Committee of the Ministry of Trade and Industry of Oman.
In Oman, payments and transfers under international transactions are not restricted.

The corporate tax base in Oman includes business profits, interest income, remunerations and capital gains.

Tax rates for joint-stock companies depend on the taxable profit and Omani citizens’ participation interest in the capital. If at least 51% of share capital is owned by Omani citizens (including participation interest in the capital of foreign companies’ branches, if any), and at least 40% of shares are offered for public sale, such companies are subject to taxation at reduced rates.

There is no income tax for physical persons or inheritance tax in Oman.

Management fee, rental of mechanical and production equipment, technical expert examination fee or research and modernization services fees are charged with 10% tax in Oman.

Companies in Oman also pay some other taxes, such as:

• for labour activity (gross payroll tax);
• for social security (gross payroll tax for employers and separately - for employees).

Foreign investment projects may be exempted from profit tax for 5 years from the date of incorporation (after this period expires, the tax exemption may be extended for another 5 years). Such projects also qualify for exemption from customs duties on mechanical and production equipment imported for operations in Oman. Imported raw materials used for manufacturing of products which are in shortage in the territory of Oman are also exempted from customs duties.

Oman is not a tax heaven or offshore jurisdiction, and a concept of Oman tax exempt company (and/or Oman international business company (IBC), offshore company, trust, foundation etc. registration) does not exist in Oman as such. A company formation in Oman could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in Oman. To set up a company in Oman is possible by correspondence, but to open a bank account in Oman will, most probably, require a personal visit.

Oman Double Taxation Agreements

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