Benefits and problems of registering a company in Oman
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Benefits and problems
Benefits of Oman company registration
- Foreign investors can open an Oman company without personal travel involvement, and with a minimum of i) one director of any nationality and ii) two shareholders, with one being a 30% shareholder, resident in Oman, unless certain conditions are met;
- Oman is a lucrative market for US investors, because:
- The 2009 Oman-USA Free Trade Agreement, ensures US entrepreneurs are afforded the same business rights as Omanis, which is not common in other Middle Eastern economies;
- US individuals and companies are allowed 100% shareholding all of Oman’s industries;
- Oman is a party to the Hague Convention on Apostilles, which simplifies the process of document certification;
- The free trade agreement negates all tariffs on industrial and consumer products between the two nations;
- Both locals and foreigners enjoy a lifestyle of “no discrimination amongst the people on the ground of gender, origin, color, language, religion, sect, domicile, or social status.”, which is enforced by Sultan Qaboos.
- Oman is expected to duplicate Dubai’s success over the next two decades because:
- In comparison to most Middle East countries, Oman is home to a vibrant expat and foreign investor community, accounting to more than 45% of the total country population;
- The state continues to liberalize regulations and drive annual growth to 7% for the foreseeable future. Healy Consultants predicts that, within 20 years, Oman will be where Dubai is today and early investors will have profited immensely;
- Being a politically stable economy in the Middle East, Oman attracts foreign investment. The country is positively ranked in the top 20 countries in the World in terms of Macroeconomic environment, according to WEF.
- Oman boasts four lucrative free zones and several industrial zones offering foreign companies: i) 100% foreign ownership, ii) up to 50 years of tax exemption and iii) special infrastructure support.
- Companies operating from GCC may want to register a subsidiary in Oman, because:
- Citizens of Gulf Cooperation Council (GCC) member states are allowed 100% foreign ownership of Oman companies under the national treatment provisions of the treaty;
- Limited liability companies incorporated in Oman pay no withholding taxes on i) dividends; ii) interest or iii) value added tax (VAT);
- Government spending represents 32% of total domestic output. Obtaining government contracts can be immensely lucrative for other more developed GCC economies.
Problems with Oman company registration
- Oman may become politically unstable in the near future, because:
- Sultan Qaboos is the longest-serving ruler in the Middle East and perhaps the world’s only absolute monarch not to have a publicly-designated successor;
- Furthermore, the ruler suffers from terminal cancer and his passing may unleash major political opposition and market uncertainty;
- Oman shares borders with politically and religiously unstable countries such as Yemen and Saudi Arabia. Consequently, armed conflicts in these countries may affect Oman’s economy.
- Doing business in Oman is difficult for most investors, because:
- For most business activities, foreign ownership is limited to 70% and requires a minimum share capital of up to US$390,000;
- Companies are required to hire 30% Omani nationals through a rule known as “Omanization”. Most Omanis are unproductive and poorly qualified, making it a challenge to fulfil the 30% quota;
- A branch office structure is limited only to companies who have secured a specific Government tender. Even then, the branch life expires after the end of the tender period;
- Oman LLCs suffer a corporate tax rate of 12% on global profits. This is one of the higher tax burdens in the region, where corporate income is often taxed at either 0% or 10% in non-oil businesses.
Best uses for an Oman company
- US investors prefer to register an 100% foreign-owned Omani LLC to do business in the Middle East;
- Oman LLC is a practical gateway for Iranian businesses interested to operate in the GCC area.