Benefits and problems of registering a company in Oman

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  • Benefits and problems

    Benefits of Oman company registration

    Oman business registration advantage

    1. Our Clients will find it easy to establish their preferred corporate structure in Oman because:
      • Healy Consultants can assist our Client to register their business in Oman without personal travel to the Sultanate;
      • Setting up an Omani limited liability company requires only two shareholders and one director of any nationality and domicile;
      • If properly structured, and depending on specific business activity, an Omani company can be 100% foreign owned;
      • For entities that require 30% local shareholding, Healy Consultants will provide our Client with professional passive nominee resident shareholder services;
      • With Healy Consultants professional services, our Client will be able to obtain company registration number within just six weeks.
    2. Our Clients can benefit from several tax advantages such as:
      • Exemption from corporate income tax on the first US$78,000 (OMR 30,000) taxable income;
      • Complete exemption from corporate taxes for up to 50 years for Free Zone registered companies;
      • Exemption from corporate income tax for 5 years, renewable for additional 5 years, for qualifying activities;
      • Absence of Value Added Tax (VAT) or sales tax and personal income taxes for business owners and employees;
      • Exemption from custom duties on import of equipment and raw material for production purposes.
    3. Our Clients looking to set up and conduct trading business within the Sultanate will enjoy other benefits including:
      • Availability of free zones and industrial zones offering 100% foreign ownership and special infrastructure support;
      • Availability of interest free or loans with subsidized interest rates;
      • Planned and serviced industrial plots provided by the government to establish industrial units;
      • Citizens of Gulf Cooperation Council (GCC) member states are allowed 100% foreign ownership of Oman companies under the national treatment provisions of the treaty;
      • Government spending represents 32% of total domestic output. Obtaining government contracts can be immensely lucrative for other more developed GCC economies;
      • Reduction of electrical and water charges for eligible industries.
    4. Our Clients form the United States will find Oman a very lucrative market for foreign investments 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;
      • The free trade agreement negates all tariffs on industrial and consumer products traded between the two countries;
      • US nationals and companies are permitted 100% shareholding in every sector of Oman’s economy;
      • Oman is a party to the Hague Convention on Apostilles, which simplifies the process of document certification;
      • The required minimum share capital for a US-owned Omani LLC is reduced to OR20,000 (US$52,000) from the normal share capital requirement of US$390,000 for other foreign nationals.
    5. Our Clients setting up in Oman stand to benefit from the county’s future-oriented economy because:
      • In comparison to most Middle East countries, Oman is home to a vibrant expat and foreign investor community, amounting to almost half the total population of the country;
      • Due to continued liberalization of regulations and steady economic growth, Healy Consultants predicts that, within 20 years, Oman will be where Dubai is today and early investors will have profited immensely;
      • Oman’s macroeconomic environment is positively ranked among the top 20 countries in the World by the World Economic Forum (WEF) majorly due to its economic stability and attractiveness to foreign investment;
      • There are no foreign currency restrictions in Oman, consequently businesses can freely repatriate profits and capital abroad.
    6. A general trading company setup by GCC nationals can be registered within 1 week, no office space lease is required before incorporation. The minimum share capital can be deposited after incorporation;
    7. In terms of due diligence, GCC nationals are only required to provide copies of national ID cards for company setup. Passport copies, address proof and other such documentation may only be required for bank account opening;
    8. For the purpose of tender bidding, usually foreign companies can register with the Omani Ministry of Commerce without establishing a local entity. If the foreign company is awarded the tender, then they are granted a set period to complete business setup and/or licensing. The specific timeframe and terms will be specific to each tender contract. Usually this period is 30 days;
    9. Oman-based businesses are entitled to numerous locational advantages, since i) Oman has an extensive coastline of 1700 kms and ii) the Sultanate is a gateway to both Asian and African markets for manufacturers and exporters. As a result, these companies enjoy their access to the direct trading routes that allow them to swiftly transit to the emerging consumer markets of Middle-East, Africa and Asia.

    Problems with Oman company registration

    1. In March 2019, Oman was added to the European Union’s (EU) tax havens blacklist for not making sufficient progress in signing up to or implementing exchange of information protocols with other global tax authorities;
    2. Our Clients doing business in Oman will experience operations cost related challenges because:
      • Starting January 2017, the Sultanate of Oman increased the corporate income tax rate to 15% from the previous rate of 12%;
      • As of 27 February 2017, the country introduced a 10% withholding tax on dividends, interests and technical services fees paid to non-resident entities;
      • Companies engaged in the oil and gas business are subject to an increased corporate tax rate of 55% on the income from sale of petroleum;
      • Small business previously not subject to income tax will from tax year 2017 be subject to taxation and will be required to file annual returns;
      • Oman is expected to introduce VAT from January 2018 onwards.
    3. Our Clients setting up their business operations in Oman will face certain Government regulation difficulties 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”. However, finding suitable qualified Omani employees can be a challenge to fulfil the 30% quota;
      • A branch office structure is limited only to companies that have secured a specific Government tender and the branch life expires immediately after the end of the tender period;
      • A minimum capital of US$2.6million is required by the Government in order to qualify for consideration for 100% foreign ownership of local entities;
      • Foreign companies are only eligible to be appointed as corporate shareholders if they have been incorporated for at least 3 years. Proof of incorporation and latest audited financial statements must be submitted for approval;
      • In case of disputes, local legislation is favorable to Omani nationals.
    4. 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, it is reported that 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.
    5. Oman-incorporated companies are likely to face operational difficulties during their initial phase since i) the country has a small population of only 4.9 million people thereby giving an access to a limited internal market; ii) they are likely to face a stiff competition from the neighbouring global trading hubs of Dubai and Saudi Arabia and iii) there are lack of industrial subsidies for the Omani companies compared to the companies in other GCC nations;
    6. Every Oman company needs to appoint an Omani Public Relations officer. Sourcing such employee is a time-consuming task, especially in scarcely populated areas like Duqm.
  • Best uses for an Oman company

    1. Due to the free trade treaty between the US and Oman, US investors prefer to register a 100% foreign-owned Omani LLC to conduct business in the Middle East;
    2. Oman LLC is also a practical business vehicle preferred by global Clients looking to establish their presence in the Oil and Gas rich Omani Sultanate economy to venture into the main industries including oil production and refining, mining of various metals and infrastructure development.

Contact us

For additional information on our business registration services in Oman, please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar
  • Mr. Petar Chakarov
  • Client Engagements Manager
  • Contact me!