Oman Company Formation

Company formation-UAE, Saudi, QATAR , KUWAIT , BAHRAIN & OMAN

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Company formation in Oman presents an attractive opportunity for foreign investors due to the country's strategic location, business-friendly environment, and stable economy. Oman offers various legal structures for businesses, with differing levels of foreign ownership and capital requirements based on the type of business entity and sector of operation.

Here is an overview of the requirements and procedures for setting up a company in Oman:

1. Legal Structure Options

Oman offers several types of legal structures for businesses, and the choice depends on the business goals, ownership preferences, and capital requirements:

• Limited Liability Company (LLC):
  1. This is the most common structure for foreign investors.
  2. Requires at least two shareholders and a minimum of one director.
  3. Foreign ownership is typically limited to 70%, with a local Omani partner required to hold the remaining 30%. However, under the Foreign Capital Investment Law, 100% foreign ownership is allowed in certain sectors (such as technology, education, tourism, healthcare, etc.).
• Joint Stock Company (SAOG or SAOC):
  1. Public Joint Stock Company (SAOG): Suitable for large-scale projects with public shareholders.
  2. Closed Joint Stock Company (SAOC): A closed company where shares are not offered to the public.
• Branch Office:
  1. Foreign companies can establish a branch office in Oman to conduct the same business activities as the parent company. Government approval is needed.
• Representative Office:
  1. A non-commercial entity used to promote the parent company’s activities but cannot engage in business operations.
• Free Zone Company:
  1. Companies set up in Oman’s free zones can benefit from 100% foreign ownership, tax exemptions, and duty-free import/export.

2. Minimum Capital Requirements

The minimum capital requirement varies based on the business structure:

• Limited Liability Company (LLC):
  1. For Omani and GCC nationals: No minimum capital requirement.
  2. For foreign investors: The minimum capital requirement is OMR 150,000 (approx. USD 390,000) for full foreign ownership.
• Joint Stock Companies (SAOC/SAOG):
  1. Minimum capital for a Closed Joint Stock Company (SAOC): OMR 500,000 (approx. USD 1.3 million).
  2. Minimum capital for a Public Joint Stock Company (SAOG): OMR 2,000,000 (approx. USD 5.2 million).

3. Foreign Ownership & Local Partner

• Foreign investors are required to partner with an Omani national (with the Omani partner holding at least 30% ownership) for most business entities.
• 100% foreign ownership is permitted for businesses in specific sectors (technology, healthcare, etc.) and in free zones.

5. Trade Name Registration

• Register a unique trade name for the company with the Ministry of Commerce, Industry and Investment Promotion (MCIIP).
• The trade name must comply with Omani law, avoiding any resemblance to existing registered businesses.

6. Prepare & Submit Documents for Company Incorporation

The following documents are typically required for company registration:

• Copies of passports and personal details of shareholders and managers.
• Proof of residency of foreign shareholders.
• Omani national ID copies of local partners (if applicable).
• Memorandum of Association (MoA) and Articles of Association (AoA), outlining the ownership structure and business objectives.
• Trade name approval from the MCIIP.
• No Objection Certificate (NOC) from the current sponsor if the foreign shareholder is already a resident in Oman.

7. Obtain the Commercial Registration (CR)

The documentation required for incorporation varies depending on the legal structure and the business activity. Commonly required documents include:

• Once the documents are prepared and approved, apply for Commercial Registration (CR) with the Ministry of Commerce, Industry, and Investment Promotion (MCIIP).
• The CR is an essential document that officially registers the company, enabling it to conduct business operations in Oman.

9. Obtain a Business License

• Depending on the business activity, the company must apply for the appropriate business license from the relevant government authorities. For example:
  1. Commercial License: For trading or general service businesses.
  2. Industrial License: For manufacturing and production activities.
  3. Professional License: For consultancy and legal services.

10. Office Space and Lease Agreement

• Companies are required to have a physical office space in Oman. The lease agreement must be submitted to the relevant authorities as part of the company formation process.
• Companies in Oman Free Zones may use virtual offices initially but will require physical office space for certain business activities.

11. Register for Taxation

• Companies must register with the Oman Tax Authority for corporate income tax. Oman imposes a 15% corporate tax on all businesses.
• Small and medium-sized enterprises (SMEs) may benefit from tax exemptions, depending on their industry and revenue.
• There is no personal income tax in Oman, and Value-Added Tax (VAT) is currently set at 5%.

12. Employment and Visas

• After the company is registered, it can apply for work visas for its foreign employees.
• Companies must also register with the Public Authority for Social Insurance (PASI) for social security contributions for employees.

13. Free Zones

Oman has several free zones that offer additional benefits for foreign investors, such as:

• 100% foreign ownership.
• Exemption from customs duties.
• Tax holidays for up to 30 years.
• No minimum capital requirements.
• Access to strategic shipping routes.

14. Oman's major free zones include:

• Sohar Free Zone: Ideal for industrial and logistics businesses.
• Salalah Free Zone: Focused on logistics, manufacturing, and petrochemical industries.
• Al Mazunah Free Zone: Specializes in trade and logistics, especially with neighboring Yemen.
• Duqm Special Economic Zone: One of the largest free zones in the Middle East, ideal for large-scale industrial projects.

Key Benefits of Setting Up a Company in Oman:

• Strategic location for trade between Asia, Europe, and Africa.
• No personal income tax for individuals.
• Free zones offering 100% foreign ownership and tax incentives.
• Stable economy and government incentives for foreign investors, especially in sectors like tourism, logistics, manufacturing, and technology.
• Skilled workforce with access to local and expatriate talent.

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