Benefits and problems of choosing Oman for company setup

1. Multi-national / Foreign companies set up manufacturing and distribution activities in Oman free zones and industrial estates because:
   • 100% foreign ownership is allowed with no minimum capital investment; and
   • There are no customs duties on imports and exports; and
   • Oman free zone entities enjoy 25 – 30 years corporation tax exemption; and
   • There are no restrictions on repatriation of profits; and
   • Low Omanisation recruitment levels; and
   • It is possible to lease lands and facilities for up to 30 years and is renewable for the same period; and
   • Lower business set-up costs and compliance requirements; and
   • There is free movement of goods between GCC countries without customs or non-customs restrictions;
   • Oman free trade zone companies are allowed to trade within Oman without local agent. A custom duty of 5% applies in these cases; and
   • The Export Credit Guarantee Agency provides export credit insurance to exporters. The export credit policy minimizes country risk and the buyers risk; and
   • Situated at the intersection of the Arabian Gulf, the Indian Ocean, and the Arabian Sea, the country serves as a gateway to the Middle East, Africa, and Asia; and
   • Oman enjoys long term political stability, giving confidence to investors. The government’s commitment to maintaining a peaceful and business-friendly environment is a significant advantage in a volatile region.
2. Oman is a tax friendly location because:
   • Corporation tax is only 15% and VAT is only 5%; and
   • There are no personal income taxes and there is no requirement to file personal income tax returns. This means there are no payroll taxes; and
   • No tax on capital gains and there are no separate stamp duties; and
   • Oman has signed double taxation treaties with 30 countries, further easing the tax burden on businesses operating internationally.
3. Oman does not impose any exchange controls. Consequently, there are no restrictions on sending remittances abroad of equity capital, debt capital, interest, dividends, branch profits, royalties, management fees, technical fees and personal savings.
4. Our multi-national Clients’ specializing in renewable energy products can benefit from Oman’s growing interest in this sector. The country is investing in renewable energy and has set a target of generating 10% of its power from renewable sources by 2025. The country imports solar panels, wind turbines, and other renewable energy products. The government has implemented policies to promote renewable energy, waste reduction, and environmental conservation. With major projects and investments in both renewable and non–renewable energy, Oman is quickly becoming a major player in the Middle Eastern renewable energy market.

1. During the Oman business set up process, our multi-national Clients’ must prepare themselves for some challenges including:
   • Foreign shareholder documents will need to be notarised and apostilled in the nearest Omani embassy, and then translated into Arabic, causing delays and costs; and
   • Depending on the business activity of our Client, it may be necessary to appoint an Omani partner with a minimum 30 percent share; and
   • Every Oman company must appoint an Omani Public Relations officer, who is responsible for communication with the Government;
2. The Oman legal and regulatory system remains less than fully transparent and new policies are often ambiguous. Commercial disputes are handled by the Commercial Court, where proceedings are conducted in Arabic, and there are various rules and conditions describing those permitted to attend the proceedings. Contractual parties have the discretion to opt into arbitration agreements which expressly require that all proceedings are conducted in the English language; and
3. Oman has stringent regulations governing the employment of foreign workers, including quotas and sponsorship requirements. Consequently, there is Government pressure on foreign companies to recruit domestic workers instead of expatriates. The Omanization policy is actively enforced by the Ministry of Labour (MoL). Consequently:
   • Employers should always seek to employ Omani nationals where possible. The ratio of Omanis/expatriate employees is sector specific. These quota targets vary depending on the sector; they can be as low as 10 percent in the Special Economic Zone at Duqm (SEZAD) and as high as 90 percent in the banking sector. Most government ministries have achieved Omanization rates at or near 100 percent; and
   • Employers are required to submit to the Ministry of Labour annual statements detailing employees and their employment particulars, working conditions and expected employee numbers and vacancies; and
   • Employers seeking to hire expatriate workers must seek a visa allotment from the MoL and Royal Oman Police (ROP). The MoL and ROP scrutinize visa allocations, often using opaque criteria; and
   • The Ministry does not grant work visas to expatriate women in most business sectors.
   • Securing employment visas for expatriate Staff is difficult. The visa application process is long with many bureaucratic obstacles include obtaining Ministry of Labor clearances.
   • Effective from April 1, 2024, foreign investors must employ at least one Omani citizen within one year of starting operations in Oman. To ensure compliance, Oman will implement administrative measures, including prohibiting transactions on the Oman Business Platform for non-compliant foreign investors. Companies will be granted a 30-day grace period, extendable once, to rectify any non-compliance. Failure to adhere to the mandate will result in electronic flagging of non-compliant companies for monitoring and enforcement by relevant authorities.
   • On July 24, 2024, the Ministry of Labour issued a statement outlining several new measures to regulate the employment sector in Oman. The statement specifies that all private sector establishments must obtain an electronic certificate from the Ministry, confirming their compliance with labor standards and requirements, including adherence to Omanisation percentages. Additionally, financial incentives will be provided to companies hiring Omanis, with potential government contributions to salaries.
4. Multi-national companies will face a lot of challenges when recruiting and maintaining employees in their Omani business including:
   • Omani citizens productivity is low because of i) the shortage of skilled and talented manpower and ii) low adoption of technologies and iii) the professional mindset of Omani employees and iv) lack managerial and technical expertise; and
   • Omani citizens enjoy a high degree of protection, making labor dispute resolution very difficult and lengthy. Consequently, it is difficult letting go non-performing or redundant employees. Both the Ministry of Labor (MoL) and the courts have broad powers to reinstate dismissed Omani national employees or mandate a severance package that provides pay for several months or, in some cases, several years.
5. Lack of transparency in government tendering processes. Payment delays to companies that completed work on government infrastructure projects are also a problem across various sectors