A major change came a few years ago when it was officially decided that expatriates do not need an Omani partner to set up a business in Oman. It was previously a mandatory requirement. Expatriates had been expecting the local sponsors to assist in developing their common businesses. Moreover, finding the right partner to engage with was a very lengthy process.
Today, registering a company in Oman is straightforward and fast. Many local consultants are there to assist, although most of the process can be done online.
Good to know:
Currently, not all businesses can be run by foreigners, and certain activities are kept for locals only. For example, making handcrafted products, cultivating live plants, or even running a food truck are activities prohibited for foreign investment.
Important:
It was announced in 2024 that all companies owned by foreigners need to have at least one local employee on their payroll and comply with the Omanization policies in place.
Steps to set up a business in Oman
Setting up a business in Oman involves several steps, from choosing the right business structure to obtaining the necessary licenses and permits. In recent years, the process has been simplified to attract foreign investment, with initiatives such as the Foreign Capital Investment Law (FCIL) in 2019 allowing greater foreign ownership and clearer regulations.
Choosing the right legal structure
The first step is to select a legal structure corresponding to your business. The most common structures are:
Limited Liability Company (LLC): It may be fully foreign-owned in some sectors, while others may require a local partner with at least 30% ownership. It is generally used when there is more than one company owner.
Sole proprietorship company (SPC): One main difference from an LLC is that it can only have a single owner. This form of company is extremely easy to create when no partners are involved. It also avoids the process of submitting board resolutions for all matters related to the company, especially with banks.
Good to know:
Foreigners are only allowed to own one SPC but can be partners in several LLCs.
Joint stock company: It can be public (if the shares are available to the public) or private. It generally requires much higher capital than an LLC. It is mainly used by foreigners investing heavily in Oman and requires them to raise local funds.
Good to know:
All residents can register to purchase shares from companies listed in the Muscat Securities Market (MSM). The purchase of shares can be done directly or through local banks.
Opening a branch office: If you already have an existing company abroad and you want to pursue similar activities in Oman, it is also possible to open a branch office. However, it is important to know that branch offices generally carry out specific contracts with local companies. Many contracts in Oman require a local company to be registered; therefore, foreign businesses try to have formal local joint ventures to be eligible to bid on most of the local projects.
Company registration
The first step will be to select a name. There is a simulator on the Oman Business Platform, which makes it easy to check if it is available and allowed or not. In general, for names to be approved by the Ministry of Commerce, Industry, and Investment Promotion, they should have a meaning or a translation in Arabic. Make sure it doesn't conflict with existing brands or trademarks. Then the following documents must be submitted:
- The complete application form
- A copy of each shareholder's passport or an ID card for locals.
In cases where there is more than one partner, a notarized memorandum of association detailing all the business activities to be carried out, the capital, and the shareholders' previous experience should also be submitted along with the articles of association.
Good to know:
Proof of capital deposited can also be required for certain types of companies.
The process can be as short as one week for SPCs. This license is the first step to having the company registered as a business entity, but other approvals might also be required from different authorities based on the business activity. All businesses have to register with the Oman Chamber of Commerce and Industry. The registration is at least for one year and has to be renewed to avoid facing penalties.
Most services are now available on the Oman Business Platform, making it very easy to apply for a new company registration even from abroad.
Good to know:
Oman's business culture requires a respectful and patient approach, an understanding of Islamic values and local customs, and an awareness of the importance of personal relationships. By demonstrating cultural sensitivity, building trust, and adapting to the unique business environment, individuals and companies can build strong and lasting business relationships in Oman.
Costs of registering a company in Oman
The costs for setting up a new company in Oman have been reduced in recent years but are subject to change. The total cost may vary depending on the type of business registered, the type of activity, and other specific requirements.
The cost of initial company registration with the Ministry of Trade, Industry, and Investment Promotion (MOCIIP) typically ranges from OMR 30 to OMR 150, depending on the type of business and its activities.
The annual renewal fee is usually around OMR 50 to OMR 100.
Companies must also register with the Oman Chamber of Commerce and Industry (OCCI), and membership fees range from OMR 30 to OMR 300 per year, depending on the size and nature of the business.
Municipalities may charge a fee to issue a commercial license. Costs generally depend on the location (from OMR 50 to OMR 300) and business type.
The cost of notarizing company documents can range from OMR 10 to OMR 100, depending on the number and type of documents.
If you hire a law firm or consulting company to help you with the registration process, their fees can range from OMR 500 to OMR 2,000 or more, depending on the complexity of your business and the services provided.
Office rental costs vary widely depending on location, size, and facilities and can range from OMR 100 to OMR 2,000 or more per month.
If you register in a free zone, additional costs will apply, including rental costs for office spaces and warehouses, which can range from OMR 500 to OMR 5,000 or more per year, depending on the area free and the required installations.
Each foreign employee needs a visa and a labor card. Typically, the fee per employee ranges from OMR 100 to OMR 300.
Opening a corporate bank account in Oman
The next step is probably the most difficult one: opening a corporate bank account at a local bank. The process itself isn't complicated if you already have an office lease agreement in place. However, in Oman, to rent a property, it is generally requested to provide the landlord or the real estate company with checks. Unfortunately, if you are new to Oman, the bank will also ask you to provide them with a company rent agreement to open a corporate account. It is mandatory for most of the local banks in Oman, and it is very unlikely to change.
This is where many consultants based in Oman might be able to help. Based on their local relationships, many of them can manage to rent on your behalf a temporary office to have a lease agreement. This agreement has to be registered with the municipality, even if it is for a short time. This is a totally legal and common practice in Oman.
Registering with the Tax Authority in Oman
Once the company bank account is open, the last step is to register with the Tax Authority to obtain a tax identification number, even if Oman only levies corporate tax and VAT (5%) above a certain amount of yearly sales. You just need to submit your commercial registration documents online.
Applying for work permits in Oman
Once the registration is completed, it is the right time to start applying for work permits and visas.
For the first year, it will be very quick to obtain permits, but their renewal can be an issue if the criteria set by the government are not met.
Free zones in Oman
Before opening the ownership of companies to foreigners, Oman had introduced several free zones throughout the country to boost foreign investment. They still offer many competitive incentives compared to the companies registered on the mainland. These zones are strategically located, mainly close to airports and sea ports, to serve as trade, logistics, and manufacturing hubs, offering businesses benefits such as tax exemptions, customs duty reductions, and 100% foreign ownership. Entrepreneurs and companies looking to establish themselves in Oman should consider each region's specific benefits and sectoral focus to find the solution that best suits their business needs.
Free zones managed by Asyad Group
Most of them are managed by Asyad Group, a global integrated logistics provider based in Oman and ranked number 4 on Forbes magazine's list of the top 10 logistics companies in the Middle East and North Africa. Asyad is a $4 billion company initially backed by $26 billion in government infrastructure spending, attracting customers and investors looking to take advantage of the country's state-of-the-art logistics facilities and established manufacturing capabilities. Asyad Group's competitive advantage is based on world-class assets, including three of the world's most efficient deep ports, one dry port, two free trade zones, special economic zones, and an excellent road network. Asyad's services also include its renowned Asyad Express services, which range from a 30,000-square-foot fulfillment center to last-mile express delivery services serving financial companies, e-commerce, manufacturing, and other activities.
Duqm Special Economic Zone (SEZAD)
Duqm Special Economic Zone (SEZAD) is located in Al Wusta Governorate, very close to the Saudi border and on the Arabian coast. It covers a very large area and was built to welcome different types of industries. It's one of the largest economic zones in the Middle East. They focus on a wide range of sectors, such as logistics, production, sightseeing, fisheries, petrochemicals, and heavy industry, as it features a major port and an international airport.
SEZAD offers a corporate tax exemption for up to 30 years for all companies registered within the zone. It also has very competitive land rental rates for all sizes.
Good to know:
Recently, many companies have built housing to be leased by newcomers so they can start their projects quickly.
Sohar Free Zone
Sohar Free Zone is also built on a similar model, though located in a very different province but connected directly to the port of Sohar to ease trading activities with exemptions from customs duties. It is very close to the United Arab Emirates and Asian markets. It also offers corporate tax exemptions for up to 25 years and highly competitive rates for utilities.
Salalah Free Zone
In the Salalah Free Zone, no minimal capital is required to start a business, and incentives provided are similar to those in other zones. This free zone was established in 2006 and specializes in logistics and transshipment. It is part of the Asyad Group, a major local player in logistics. In the same area, there is also Al-Mazuna, which focuses mainly on trading with Yemen and the Horn of Africa in the fields of manufacturing and logistics. The incentives are similar to those in other free zones with corporate tax and customs duty exemptions.
Knowledge Oasis Muscat (KOM)
Knowledge Oasis Muscat (KOM) is located in the capital Muscat and focuses primarily on technology, education, and innovation. It offers office space, incubators, and support services to startups and existing businesses, as well as various tax benefits, including some specific ones for research and development. It is one of the few free zones in Muscat, along with the new zone being developed close to the old Muscat International Airport.
Al Buraimi free zone
Finally, there is also one located in Al Buraimi Governorate, near the border with the United Arab Emirates. It mainly focuses on manufacturing, industrial activities, and trading with other GCC countries.
Oman industrial estates
Madayn is a state organization created by Royal Order No. 4/93 in 1993, aiming to develop and manage industrial cities in the country to increase the involvement of private sector companies, mainly in the manufacturing sector, to contribute to the country's growth. Today, Madayn manages the industrial cities of Sur, Soharr, Raysut, Nizwa, Al Buraimi, Al Rusail, Samail, Ibri, Al Mudhaybi, and Mahas, in addition to Muscat (KOM) and Al Mazunah.
The primary goals of the industrial estates are to attract both foreign and domestic investments and to invigorate the private sector, thus driving sustainable economic and social development. These estates are dedicated to advancing modern technologies and enhancing the skills and performance of employees. They also aim to generate new job opportunities, particularly for national executives, and to promote the establishment of export-driven industries. Furthermore, they focus on bolstering strategic sectors such as transportation and manufacturing.
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