Company Formation

Company Formation

Business setup in Oman occupies the area on the south eastern coast of the Arabian Peninsula and the Arabian Sea. It is one of the strategic business centres that foreign ex-pats have witnessed. Apart from being one of the favourite tourist spots, the ground stands profitable when diversifying business units. According to the World Bank, Oman is a high-income economy widely used to deal with international businesses. The government of Oman has understood the benefits of shifting the focus towards the non-oil segments and has been taking numerous strategies to uplift the other divisions to attract a higher FDI in the nation. Suppose you are a business investor who has been looking for an option to diversify the business or even incorporate a new entity. In that case, Oman is the perfect place that you can count on. In this guide, we will take you through all the essentials required to know before doing a business setup in Oman.

Benefits of Doing Business in Oman

The government of Oman attracts investors and entrepreneurs to do business setup in Oman by giving them a number of business opportunities and incentives. Other than these, there are a few more benefits of setting up a company in Oman, including;

• Booming economy
• International presence
• Holding a strategic location
• Transparent legal system
• Availability of skilled laborers
• Modern infrastructure
• Business-friendly environment
• Extraordinary tax exemptions

Types of Companies in Oman

Company structure can be called a skeleton to be decided in the initial stage of company incorporation. Any business investor needs to select a corporate structure depending on the availability of capital and the number of shareholders who are ready to invest. A business owner looking to set up a business in Oman can choose from any of the following structures:

• Limited Liability and Sole proprietor Company

A limited liability company (LLC) is one where each shareholder's liability is limited to one's share of the capital. An LLC company in Oman is required to have a minimum of 2 shareholders, LLC is the most commonly preferred company type by foreigners wanting to set up a business in Oman., while a SPC is a single member company and has only one share holder.

• Public Joint Stock Company

A joint-stock company is one of the capitals of which is distributed as stocks. The shares of a public joint-stock company in Oman can be traded publicly. The minimum share capital required to start such a company is OR 150,000 (about 390,000 USD). 

A joint-stock company may not be incorporated without the approval of the Ministry of Commerce and Industry and the issuance of a license testifying that.

• Private Joint Stock Company

A joint-stock company, the shares of which are not available for trading publicly, is a private joint-stock company. 

A private joint-stock company in Oman requires a minimum of 3 shareholders (one of whom should be an Omani citizen holding at least 30% of the total shares) and a minimum share capital of OR 50,000 (about 130,000 USD).

• Limited Partnership

A limited partnership in Oman can be formed by two or more members. It requires at least one general partner and one limited partner to be registered. The general partner, who must be an Omani national, is liable for the debts and obligations of the partnership without limitation in liability. 

The limited partner bears limited liability and is liable for the company's debts and obligations only to the extent of one's capital contribution.

• Commercial Agency

A commercial agency in Oman is a company that is assigned to promote or distribute products or services of a foreign entity in the Sultanate. The primary function of such a company is to export goods and services to Oman by a foreign business. 

In a commercial agency in Oman, the role of a commercial agent can be assigned only to an Omani national registered with the Omani Chamber of Commerce or a local entity having at least 51% local shareholding.

• Branch Office

A branch office in Oman can be set up by a foreign company looking to open an establishment in the Sultanate. For forming a branch, a local agent to sponsor Omani visas and licenses is required.

The branch is also required to obtain approval from the Ministry of Commerce and Industry (MOCI). Since a branch is not considered a legal entity separate from its parent company, the latter is liable for its activities and obligations.

• Representative Office

A representative office can be started purely for market research or promotion purposes. It is not allowed to carry out commercial or business-related activities. A representative office in Oman is required to have at least one appointed individual who is a resident of Oman.

How to Start a Business in Oman?

The core steps involved in the company formation in Oman are listed below:

• Get Transparency Regarding the Business Idea

It stands to be of utmost importance to be very clear regarding the business idea that an individual holds. Clarity of the business idea will help perform the task on time and streamline the steps accordingly.

It is recommended to join hands with experts at the initial stage to get in touch with an expert to perform the legal actions.

• Decide the Company Name

Deciding a trading name sounds easy, yet there are strategies to be played around. A company name is nothing but the organization's face that the public will know later.

Make sure that the selected company's trade name doesn't sound offensive and hurt religious sentiments.

• Submit the Relevant Business Papers

Submitting the business papers is another vital thing that completes the entire incorporation process. Presenting a definite set of documents and getting approvals from the relevant authorities helps to gain the appropriate business license.

• Apply for Respective Permits

Every business industry needs to obtain a specific license to carry out the process with ease. A permit stands as a legal document that signifies that the business operations are carried out with ease.

• Register for Corporate Tax

A business entity must register with the tax authorities to comply with the tax proceedings. Therefore, a business owner must have a clear idea of the taxation part as it will help them comply with the audit and accounting processes at ease.

• Create a Company Seal

Designing a company seal is of utmost importance for any business entity to comply with the corporate proceedings as it is included in the company's letterhead and other documents.

The steps mentioned are to be followed accordingly, and to know more, here are more about 8 Steps to Start a Foreign Business in Oman.

Business Setup in Oman Free Zones 

To date, there are five free zones in the nation that include:

• Al Mazunah Free Trade Zone
• Duqm Special Economic Zone
• Salalah Free Zone
• Sea Ports of Oman
• Sohar Free Trade Zone

Documents Required for Company Registration in Oman

Below are the required documents to do a company registration in Oman:

• Filled out the business application form
• Articles of Association and Memorandum
• Passport copy of all the shareholders
• Visa copy of all the shareholders
• Initial deposit and its certificate
• Chamber of Commerce certificate
• Industry affiliation certificate
• Identity cards of all shareholders
• Tax registration certificate

Company Formation in Oman - Prerequisites

Below are the prerequisites for doing a company formation in Oman:

• Minimum one director 
• The nationality of directors doesn't matter
• Should have a registered office address
• Minimum two shareholders

Opening a Bank Account in Oman

The bank account opening process is another focused area that can't be overlooked. Every business unit needs to have a corporate bank account that stands distinct from an individual account.

Opening a corporate bank account turns out to be a beneficial move as it can help you to avail the following benefits:

• Manage the business transactions efficiently
• It helps to separate the personal and corporate expenses
• The company growth can be tracked easily
• Fetching out real-time reports becomes easy

If you hold a business unit in Oman or are looking to set up one, do read our latest blog on A Guide to Corporate Account Opening in Oman

Oman Tax System

Taxation is another dimension that no business entity can deny. Therefore, be it an individual or a corporate entity, complying with the taxation system is a must.

Oman is also a part of the GCC nations, and thus, the individuals are not subjected to pay tax. On 1 April 2021, the nation introduced the VAT system like other nations like Saudi Arabia, United Arab Emirates, Bahrain, etc. The corporate entities are liable to pay a VAT of 5%.

The activities that get covered under the VAT System in Oman include:

• Commercial
• Industrial
• Professional
• Artisanal
• Service activity

The following supplies shall be exempted from the taxable condition and controls determined by the regulations:

• Financial services
• Healthcare services and related goods
• Educational services and associated goods
• Undeveloped land (bare land)
• Resale of residential properties
• Local passenger transport
• Rental of properties for residential purposes
• Mining in accordance with the Law on Mining
• Export of locally manufactured or processed products
• Fishing and fish processing, farming, or breeding
• Medical care established by private sectors

Withholding Tax

A 10% withholding tax is applied to the following services in Oman:

• Royalties
• Management fees
• Consideration for research and development
• Consideration for the use of the right to use computer software

To know more on the same, look at our guide, Tax Services in Oman, which will highlight the essentials that you need to know further.

• Stamp Taxes

Currently, there are no separate stamp duties levied in Oman.

Visa Services in Oman for Setting Up a Company in Oman

Onboarding the right talent is one of the considerable skills that every business entity should have. The initial members of a business entity stand as the company's foundation pillars and define the business growth.

After your company has registered, you need to hold an investor visa to visit the nation. Simultaneously, the workforce that you hire needs to be provided with an employment visa.

Here's a guide on the Visa Services in Oman that you need to know more about in detail.

Thus, you have seen the core grounds that are to be considered to establish a business unit in Oman. Now, coming to the implementation part, if one is not well-versed in the legal proceedings, the entire process turns out to be challenging.

The ideal and profitable way to deal with the same is to join hands with a certified business consultant who has complete knowledge of the same. Getting in touch with an expert not only helps you to complete the task on time, but you can also utilize your available time and resources in the best possible way.

Business Setup Worldwide | Your Business Expert

We are an experienced team of professionals helping business investors set up their businesses in Middle-Eastern countries at ease.

Our expert team is well-versed in the business setup process in Oman and can help you incorporate your business dream with ease.

Our Business Setup in Oman Services

With years of industry experience and knowledge, our business setup in Oman services includes the following:

• Company incorporation and registration
• Audit and assurance
• Tax consultation
• VAT registration
• Accounting and Bookkeeping