Oman, strategically located in the Arabian Peninsula, is known for its welcoming investment environment, attractive tax policies, and stable economy. However, like any country, conducting business in Oman requires a deep understanding of local laws, compliance requirements, and operational challenges. Here, we will explore the key points to consider when doing business in Oman, highlighting challenges, visa options, compliance requirements, and the economic outlook for foreign investors.
Challenges of Doing Business in Oman
Oman offers significant business opportunities but also presents unique challenges. Some of the major obstacles include:
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Regulatory Changes:
One of the most notable challenges is the frequent updates to Oman labor law and other regulations. These changes often affect expatriates, investor visas, and employment contracts. Businesses need to stay updated on these legal shifts to remain compliant.
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Complex Corporate Procedures:
While Oman has made strides to simplify the company registration process, establishing a business still requires navigating bureaucratic layers. Understanding company formation in Oman can be daunting for new international companies planning to set up in Oman, especially deciding on the company structure and its implications.
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Cultural Differences:
It is important for international companies coming into Oman to understand and do research on the cultural aspects of the Sultanate. It is important to learn about Omani culture, customs, and etiquettes. Hiring an Omani national for your company will help bridge the cultural gap.
Compliance Requirements for Businesses in Oman
Compliance is a critical aspect of starting a business in Oman. Companies must follow the Oman employment law when hiring employees and adhere to visa and immigration regulations. Furthermore, there are tax implications, though Oman’s tax system is relatively favorable compared to other Gulf Cooperation Council (GCC) countries. Meeting Oman’s corporate regulatory compliance standards is essential for long-term success.
Choosing the business structure:
Choosing the right business structure is essential if you want to do business in Oman. When registering a company in Oman, you must decide on the right business structure depending on the type and nature of business. There are different types of company structures such as limited liability company (LLC), Sole Proprietorship Company (SPC), Representative trade office, branch office, and Freezone Company. If you get it wrong, it takes a long time to correct the mistakes.
Corporate Regulatory Compliance:
This includes filing annual reports, renewing business licenses, adhering to Oman’s corporate income tax guidelines, and managing employees per the new Oman labor law for expatriates.
Oman Tax Law:
The country offers a relatively simple tax system, but businesses must comply with the Oman corporate income tax, which varies depending on the type of business entity. It is mandatory for companies to comply with the Oman tax system for the smooth running of the business. Some of the taxes that are applicable for companies in Oman are corporate income tax, withholding tax, Value added tax (VAT), excise duty, custom duties, municipality tax etc.
Oman Economic Outlook for Foreign Investors
Oman is positioning itself as a hub for foreign investment, particularly after implementing the new foreign investment law that allows 100% foreign ownership in certain sectors. Oman’s government, through Vision 2040, aims to diversify its economy, offering numerous opportunities for foreign investment in Oman, especially in sectors such as logistics, tourism, and renewable energy.
100% Ownership for Foreign Investors:
The government has relaxed ownership laws, allowing LLC company formation with full foreign ownership, which was previously restricted. In this, no local partners or sponsors are required, no minimum capital is required, and you have the choice of choosing the business entity.Joint Venture:
Certain sectors and business activities are only open for foreigners if you have a joint venture with a local Omani company. As a joint venture business, you can enjoy the benefits of choosing your local sponsorship partner, you can negotiate the shareholding percentage (no more than 70/30%), priorities for certain tenders and many more.
How Long Does It Take to Set Up a Company in Oman?
The company formation process in Oman can take anywhere from a few weeks to several months, depending on the type of business and whether you use reputable Company formation experts to guide you. The process includes preliminary assessment, choosing the corporate structure, documentation and paperwork, legal compliance and registration, post company registration incorporation – licensing and permits, visa applications and much more.
Visa requirements for doing business in Oman
Oman offers several visa options for foreign nationals involved in business activities. Oman offers various business visas catering to different needs. Some of those are employment work visa, business express visas, employment contracting visa, temporary work visa etc. The most common visa for a business owner is an investor visa.
Investor Visa Oman:
The Oman investor visa is a long-term visa for foreign investors who have established or invested in a business in Oman. This visa allows the holder to live and work in the country, making it crucial for long-term business ventures. There are two types of investor visas – 5-year visa minimum investment of OMR 250000 10-year visa – minimum investment of OMR 500000.
Navigating the Oman Labor Law and Omanisation:
International companies planning to set up in Oman should understand the Oman labor law, the updates and the Omanisation rate for your company. There are several parameters under the new labor law that the international companies must understand such as performance review, termination of employees, social protection fund (SPF payments, leave policy, compliance of omanisation, prohibited professions for expat employees and much more. The company should implement a modern framework for navigating uncertainties, labour regulations, and omanisation goals.
Conclusion
Oman provides numerous opportunities for entrepreneurs and international businesses, particularly with its favorable investment laws and strong economic outlook. However, businesses must remain aware of compliance requirements, corporate structures, labor law changes, and the differences between various visa types. By leveraging corporate immigration services and staying up to date with regulatory changes, companies can successfully establish and grow their businesses in Oman.
For companies looking to take advantage of the economic potential in Oman, understanding the business setup in Oman and how to navigate Oman labor law and foreign investment in Oman is crucial to long-term success.