Questions and Answers

Frequently Asked Questions

What types of business entities are available to open in Oman?

  • Limited Liability Company (LLC) If you want to set up a legal entity which allows you to trade with minimal restrictions, employ your own team and have a bank account in Oman the LLC is the best option to consider.
  • LLC (Free zone). This is an option for businesses who require limited trading options in Oman. There are 4 four Free-zones
  • Branch Office. A foreign company can set up a branch office whilst delivering a specific government contract. No other business can be done within this framework.
  • Representative Trade Office. The office can promote and market the sale and/or production of their products and facilitate contracts in Oman. It can also be used to promote an international business as a “shop window “but it is not permitted to trade.

Do I need an entity if I partner have a distributor agreement with a local Omani company?

No, you don’t. Its advisable to choose your distributor carefully and to have a tier one or two national or international lawyer to draw up your legal framework.

What are the requirements to setup an LLC in Oman

  • Foreign company sponsor needs to be at least 3 years old.
  • The minimum capital requirement to be deposited into a local bank account before the completion of the first yea’s audit is:
    • Grade 1 – OMR 150 000 (US$400 000)
    • Grade Excellent – OMR 250 000 ($650 000)
  • 70/30% legal shareholding in favour of the foreign company. This does not apply if the shareholders are:
    • USA and GCC (100% ownership)
  • A bank account is set up after completion of company registration process including commitment to a minimum of 12 months tenancy agreement.
  • A minimum of two shareholders and one Director
  • The local partner/sponsor can be an individual or company
  • Omanisation targets. Each business must employ a minimum number of Omanis depending on the sector.
  • Workplace accommodation (offices, warehouses etc.) – Employees can only be recruited after establishing a tenancy agreement and registration with the Ministry of Manpower (MOMP)

Does the OMR 150 000 have to be paid in one lump sum?

The capital only needs to be deposited after your company has been registered.

It does not have to be a single lump sum. Provided you demonstrate that the capital has been deposited, there are different options on how to do this:

Costs

  • Any start-up capital that is deposited from the international shareholder such as setup costs
  • Salaries for local employees
  • Rents such as offices, vehicles and employee accommodation
  • Costs of equipment etc.
  • Costs of importing equipment and products into Oman

Dividends

  • Pay the first annual dividend into the local bank account
  • Keep it on the balance sheet

What are the benefits of setting up in a free zone?

Free zones in Oman.

There are four operational free zones in Oman:

  • Sohar Free Trade Zone
  • Salalah Free Zone
  • Duqm Special Economic Zone
  • Al-Mazunah Free Zone
  • Knowledge Oasis Muscat (KOM) – IT focused business park with similar free zone benefits.

Setting up in an Oman Free zone.

Each free zone has its own services, criteria, restrictions and benefits but generally they all offer a similar range of benefits:

  • 100 per cent foreign ownership (minimum two shareholders)
  • 10-30 years tax holiday on profits and dividends
  • No customs duties
  • No restrictions on sales within the GCC; a standard 5 per cent GCC customs duty applies
  • No restrictions on the repatriation of capital or profits
  • No customs or excise duties
  • No minimum capital requirements
  • Competitive labour and utilities costs
  • Company setup requirements
  • Free zone Limited Liability Company (LLC)
  • Minimum I director
  • Minimum one shareholder
  • Minimal Omanisation requirements

NOTE please see the specific services, restrictions and benefits of the specific Free zone that you are considering.

Do I require a partner if I set up a business entity?

It depends on your business objectives:

  • Mainland LLC – yes (70/30 % in favour of the
  • international investor)
  • Free zone – no
  • Branch – no
  • Trade office – no

Can I have full control of a LLC business?

Legally the local sponsor will always own the minimum of 30%. However, through a shareholder’s agreement, the international investor can negotiate a commercial agreement to control 99.9% of the shares along with the full fiduciary, financial, management and operational responsibilities. This is known as a “Silent Partner”

What are the approximate timeframes to setup an LLC in Oman?

There are many unknown variables that make it difficult to commit to the overall timelines as it depends on many factors which are in the hands of the client. (I.e. documentation approvals, notarisations etc.) Our experience suggests that companies should anticipate that the whole process will take between 1-2 months.

What are the costs of setting up a business in Oman?

This completely depends on your business activity, your nationality, whether you set up a LLC or a free zone LLC etc. For more information refer to the guides on this website.

How do I get a work or investment visa?

Every company in the Oman requires the services of a Government Liaison Officer who has to be an Omani citizen. They are locally known as a Public Relations Officer or PRO.

PROs are responsible for processing governmental documents and paperwork such as visa applications, labour cards, and company registration documentation and approvals in multiple government offices including:

  • Chamber of Commerce
  • Ministries such as Commerce and industry, Manpower and other ministries for specialist licences
  • Municipalities
  • Real estate companies (conventional and serviced office providers)
  • Finance (tax)
  • Royal Oman Police (licences, customs clearances etc.)
  • You will only be eligible for an initial work visa after you have followed the business setup process and procedures

When can I open a bank account?

Oman’s banks are very strictly regulated, and you will need to go through the hoops before opening an account.

Whilst some banks are more flexible than others, there are strict processes and procedures to achieve before a person can open an account. They include:

  • Company registration
  • Tenancy agreement for 12 months
  • Municipality license
  • Ministry of manpower registration
  • Tax registration
  • Obtaining a work/investor visa (although sometimes banks accept a passport provided the authorised signatory is on the CR document)

Do I need to lease a workplace (office, warehouse etc) to set up a trading company?

Yes. The is the first compulsory requirement after you have registered your company with the ministry of Commerce and Industry and the chamber of commerce.

Do GCC countries have any benefits of opening an LLC in Oman?

GCC countries are different to an international company. A GCC national or company follows the same procedures as Omani nationals and companies, outlined below:

  • Foreign company sponsor needs to be at least 3 years old.
  • The minimum capital requirement to be deposited into a local bank account within the first twelve months by a foreign company to do business in Oman is OMR 20 000 to obtain a recognised LLC.
  • GCC national may own 100% of the equity (no local partner required).
  • A bank account is set up after completion of company registration with the Ministries and local authorities.
  • There is a requirement to have a minimum of two shareholders and one Director
  • Each business must employ a minimum number of Omanis depending on the sector.
  • Workplace accommodation (offices, warehouses etc.) – Employees can only be recruited after establishing a tenancy agreement.

NOTE: GCC countries are exempt certain restrictions, most notably and specifically:

  • The minimum capital investment is reduced from OMR 150 000 to the minimum of OMR 20 000.
  • These companies have the right to own 100% of their business with no local partner requirement.

How do American companies benefit from the Free Trade Agreement (FTA) with Oman?

USA companies benefit from the FTA by having the same privileges as GCC Nationals and companies, as outlined below:

  • Foreign company sponsor needs to be at least 3 years old.
  • The minimum capital requirement to be deposited into a local bank account within the first twelve months by a foreign company to do business in Oman is OMR 20 000 is recommended to obtain a recognised LLC.
  • OMR 150 000 is required to be a Grade 1 LLC
  • A US national may own 100% of the equity (no local partner required).
  • A bank account is set up after completion of company registration with the Ministries and local authorities.
  • There is a requirement to have a minimum of two shareholders and one Director
  • Each business must employ a minimum number of Omanis depending on the sector.
  • Workplace accommodation (offices, warehouses etc.) – Employees can only be recruited after establishing a tenancy agreement.

NOTE: USA companies (due to the Free Trade Agreement (FTA) between Oman and the USA) are exempt certain restrictions, most notably and specifically:

  • The minimum capital investment is reduced from OMR 150 000 to the minimum of OMR 20 000 (recommended or the required working capital whatever is higher)
  • USA companies have the right to own 100% of their business with no local partner requirement.

All other processes and pre-requisites outlined in this guide are the same as other international companies.