Business entities in Oman
Healy Consultants advises our Clients on the optimum corporate structure for doing business in Oman, then completes the setup procedures on our Client’s behalf. As Oman imposes restrictions for foreign investment, the most common solution is to set up a limited liability company with an Omani, an American or a national of the GCC State as a passive nominee shareholder. However, it is also possible for our Clients to set up a 100% foreign owned company if they meet certain government requirements, or if they incorporate a company in one of Oman’s free zones.
Doing business in Oman with a local entity
Omani limited liability company
- All local companies are required to have i) two shareholders ii) directors iii) a minimum paid up capital of US$390,000 and iv) a local address. Of the two required shareholders, one must be a national of Oman, of a GCC State or of the USA and must own 35% of the company’s shares;
- Since the signature of the 2009 Free Trade Agreement with the USA, American citizens are treated as local citizens and are therefore allowed to form local companies without a local partner, provided that all of the shareholders are American. For such cases, the minimum share capital is only US$52,000;
- Best uses: An Omani LLC is the most commonly entity for foreigners that wish to do business in Oman. It is commonly used for various trading and manufacturing business activities.
Wholly foreign-owned limited liability company
- According to Omani laws, 100% foreign owned companies must seek approval of the Ministry of Commerce and Industry (MOCI).To obtain such approval a company must submit a detailed business plan highlighting the capital investment and the benefits for the Omani economy, including the number of local jobs to be created;
- Furthermore, the company is also required to have i) minimum of two shareholders and two directors and ii) paid-up capital of US$1.3 million;
- Best uses: securing approval by the Omani government is very challenging and will require a higher paid-up capital. We recommend only this type of business entity to Clients that are willing to do such investment and to hire a significant number of local employees.
Oman free zone company
- Companies incorporated in one of Oman’s four Free Zones are allowed to i) be 100% foreign owned ii) conduct business with local customers and iii) do not require a minimum investment. It is a good alternative to the strict restrictions of establishing a wholly foreign owned LLC;
- Furthermore, free zone companies are also exempt from i) corporate income tax, ii) custom duties and iii) have lower requirement for employment of Omani workers (only 10%);
- Best uses: Free zones are recommended for manufacturing companies that wish to use Oman as a base to expand operations in the region.
Joint stock company
- Joint stock companies that offer their shares to the general public to raise capital are called public joint stock companies (SAOG), and require i) a minimum share capital of US$5.2 million and ii) an Omani shareholder with 30% of the shares;
- Joint stock companies that do not offer shares to the public are known as private joint stock companies (SAOC), and require i) a minimum share capital of US$1.3 million ii) minimum of three shareholders, one of which must be an Omani national holding 30% of the total shares;
- Best uses: We recommend joint stock companies for larger projects, involving large investments of funds or raising private or public capital.
Doing business in Oman with a foreign entity
Omani branch office
- Oman’s Commercial Companies Law limits the activities of branches not owned by GCC or US shareholders to government contracts or to areas economically necessary for Omani development. In both cases, branches are required to have a local agent to sponsor Oman visas and licenses.
- The branches are also required to register with the Ministry of Commerce and Industry (MOCI) and their registration is only valid for the duration of the project. In order to issue a license, the ministry will require a bank guarantee of US$390,000;
- Best uses: This type of business entity is only recommended for Clients that have already secured a contract with the Omani government.
- While the Omani representative office is 100% foreign-owned and controlled, it is not permitted to make direct sales within Oman. Its scope of activities is limited to i) promotion of the parent company’s business and ii) market research;
- Representative offices are allowed to sponsor and hire employees;
- Best uses: Representative office are recommended for Clients that wish to promote and explore the Omani market, without carrying any commercial activity in the country.
- Foreign companies that do not wish to register in Oman are allowed to conduct business through commercial agents;
- The agreement with the local agency must be registered with the Ministry of Commerce and Industry (MOCI);
- Clients working through a commercial agent are still required to file annual tax returns and pay corporate income tax on their Omani income.
Table of comparison between Oman entities
|70% LLC||100% LLC||Free zone (FZ)||Branch office||Representative office|
|Total company setup costs||US$26,900||US$29,200||US$30,000||US$31,800||US$24,950|
|Subsequent annual costs||US$5,970||US$5,970||US$5,070||US$5,070||US$8,440|
|Allowed to issue sales invoices?||Yes||Yes||Yes||Yes||No|
|Allowed to sign contracts?||Yes||Yes||Yes||Yes||No|
|Corporate tax payable||12%||12%||0%||12%||0%|
|Allowed to import goods?||Yes||Yes||Yes||Yes||No|
|Allowed to export goods?||Yes||Yes||Yes||Yes||No|
|Wholly foreign owned?||No||Yes||Yes||Yes||Yes|
|Type of business permitted?||All||Government contracts and MOCI approval||All||Government contracts and MOCI approval||Research and marketing|
|Oman bank account allowed?||Yes||Yes||Yes||Yes||Yes|
|How long to open company bank account?||3 weeks||3 weeks||4 weeks||4 weeks||4 weeks|
|Can rent an office in Oman?||Yes||Yes||Yes||Yes||Yes|
|Tenancy agreement required?||Yes||Yes||Yes||Yes||Yes|
|Can conduct business within Oman?||Yes||Yes||Yes||Yes||No|
|Can apply for immigration visas?||Yes||Yes||Yes||Yes||Yes|
|Oman employment visa fees?||US$3,950||US$3,950||US$3,950||US$3,950||US$3,950|
|Can hire staff in Oman?||Yes||Yes||Yes||Yes||Yes|
|Incorporation period||6 weeks||6 weeks||2 weeks||6 weeks||5 weeks|
|Shelf companies allowed?||Yes||Yes||Yes||No||No|
|Minimum shareholders||2||2||1||Parent company||Parent company|
|Minimum directors allowed||1||1||1||0||0|
|Bearer shares ?||No||No||No||No||No|
|Public registrar of companies?||Yes||Yes||Yes||Yes||Yes|
|Corporate directors allowed?||Yes||Yes||Yes||Yes||Yes|
|Oman resident company secretary required?||Yes||Yes||Yes||Yes||Yes|
|Can buy Oman property?||Yes||Yes||Yes||Yes||Yes|
|Need to travel?||No||No||No||No||No|
|Annual Oman tax return?||Yes||Yes||Yes||Yes||Yes|
|Annual audited financial statements?||Yes||Yes||Yes||Yes||Yes|
|Access to Oman double tax treaties?||Yes||Yes||No||No||No|
|Annual license renewal?||Yes||Yes||Yes||Yes||Yes|
|Oman national director or shareholder required?||Yes||No||No||No||No|
|Allowed own shares in other Oman companies?||Yes||Yes||Yes||No||No|
|Draft invoice||Contact us|