Quality Government investment incentives offered in Oman in 2024

Oman’s foreign investment law is designed to welcome and attract overseas investors. However, in our experience doing business in Oman remains challenging, with red tape and inefficient government departments. That said, Oman’s free zones are more business-friendly, with quicker company incorporation, and a range of incentives not available with ‘onshore’ Omani companies.

Examples of incentives

• Income tax holiday for five years from the start of production or activity in the priority sectors of i) manufacturing and mining ii) tourism and iii) agriculture and fisheries;
• Foreign-owned Omani companies that pay foreign tax on income already taxed in Oman are eligible for foreign tax credit at the Secretariat General for Taxation;
• Omani-incorporated companies can freely repatriate profits and capital outside Oman;
• Oman’s three free zones, two special economic zones and eight industrial estates offer 100% exemption from corporate taxes and customs duties, as well as other non-tax benefits. See more benefits on our Oman free zones webpage.

Export-orientated companies

• Oman is a member of major trade organisations and economic blocs including the WTO, the Gulf Co-operation Council (GCC) and the Greater Arab Free Trade Area (GAFTA), offering Omanin companies preferential trade tariffs with fellow member states;
• Oman has a network of free trade agreements with major economies such as the US, Singapore and Switzerland;
• All non-oil exporting companies in Oman receive export credit insurance from the Export Credit Guarantee Agency (ECGA);
• Note that Oman is susceptible to regional geopolitical tensions, which have the potential to impact trade in the region.

Manufacturing companies

• 100% exemption from customs duties on imports of machinery, equipment and raw materials;
• Provision of subsidised electricity, water and gas;
• Eligibility for government soft loans.

Transport and logistics companies

• Oman is an ideal transport and logistics hub for multi-national companies operating in the region. There is now a modern international airport in Muscat, with plans to develop a Free Zone, Logistics Hub and Retail Zone;
• Oman is also located strategically on major sea routes between Europe and Asia. In our opinion, this puts Oman’s seaports such as Salalah and Sohar at a strategic advantage over rivals such as Jebel Ali (in UAE). On the other hand, Oman’s location near the Strait of Hormuz means it is vulnerable to geopolitical tensions in the region, in particular between Iran and the West. This has the potential to disrupt trade;
• Oman’s National Railway project aims to link prime development areas of the country with a single network, as well as connecting remote Salalah port with other GCC networks.

ICT companies

• Oman is not renowned as an ICT base. However, Knowledge Oasis Free Zone in Muscat offers attractive incentives including i) 100% foreign ownership ii) 100% exemption from personal taxes and iii) duty-free access of products from Oman to GCC nations;
• Fibre-optic infrastructure is expected to serve 90% of Muscat Governorate by 2021.

Oil and gas services companies

• Oil and gas accounts for a sizeable percentage of Oman’s revenues and economic output. In our opinion, there will be increased investment in technologies which boost production of oil and gas, and the government will likely seek overseas expertise to do this;
• Incentives are available for International Oil Companies (IOCs) and service companies to develop difficult-to-recover oil and gas reserves. These include i) favourable contract terms for approved projects and ii) generous terms for the development of fields requiring sophisticated tools and techniques.

US-Oman Free Trade Agreement (FTA)

• Under the 2009 US-Oman FTA, US-owned companies:
  • Can enter into contracts with Oman government companies or partly-owned companies without registering a branch office in Oman;
  • Need a minimum paid-up share capital of OMR20,000 (US$52,000);
• Furthermore, the FTA means US citizens can take 100% shares in any industry in Oman, and do not need a local partner or Omani public relations officer;
• Accelerated movement of goods between the two countries, and elimination of most non-tariff and tariff hurdles;
• Streamlined dispute resolution procedures;
• Improved labour standards;
• Improved protection of intellectual property rights.

Conclusion

Healy Consultants Group can effectively and efficiently help foreign investors access Oman government incentives and strategic advantages.