Company formation in Oman is a process involving several stages. Investors are expected to meet the general conditions for company incorporation and to apply for the registration of the new business according to the chosen business form. Setting up a company in Oman can be easier with our assistance.
| Quick Facts | |
|---|---|
| Types of companies |
– limited liability company, – closed stock company, – joint stock company |
|
Minimum share capital |
– RO 500,000 for the closed stock company, – RO 2 million for the joint stock company |
|
Minimum number of shareholders |
3 for the closed companies |
| Number of directors | Board of Directors with an odd number of individuals |
| Local director required (Yes/No) |
Not mandatory |
| Conditions for company formation |
– the percentage of foreign ownership cannot be more than 70%; – special approvals are needed for joint stock companies; – companies need to submit their constitutive documents and register |
| Residency requirements for foreign company owners |
– |
| Time frame for the incorporation (approx.) |
– 1 week for the closed stock company; – 1 month for the joint stock company |
| Corporate tax rate | 15% |
| Dividend tax rate | – |
| VAT Rate |
– 5% standard rate, – 0% reduced rate |
| Number of Double Taxation Treaties (approx. ) |
30 |
| Annual accounting/filing requirements |
– a single tax return within 4 months of the accounting year end; – auditign requirements apply |
| Special licenses |
Yes, mandatory |
| Tax exemptions or incentives |
– special tax exemption for 5 years for companies in selected fields; – tax deductions for certain taxpayers; – others may apply |
Together with our team, local and foreign investors are able to select a business form that suits their needs, as well as handle the subsequent steps for business registration and compliance, including the initial stages of business permit and license application and hiring employees according to the Omani laws.
Read below to find out more about the general conditions to open a company and reach out to our lawyers in Oman who specialize in company law for personalized answers to any of your business questions.
Our immigration lawyers in Oman can also help you if you wish to relocate here.
Table of Contents
General conditions for company formation in Oman
Investors who wish to open a company in Oman are required to choose a business form that suits their needs. There are several options, each with its own particularities and advantages.
Our lawyers specializing in starting a business in Oman list the main types of business entities below:
- Individual company: this is a business form set up by a single individual; it can be seen as the Omani equivalent of the sole trader, as the founder is fully liable for the debts and obligations of the business; a minimum capital applies in this case; our agents specializing in company formation in Oman can give you more details;
- General partnership: formed by 2 or more business partners who are jointly responsible for the funds of the company as well as its debts;
- Limited partnership: also incorporated by 2 or more partners, however, in this case, the of the two is fully liable and the other is only liable for the debts of the business up to the amount of his investment in the company;
- Limited liability company: formed by 2 or more founders, with no more than 40 partners; the shareholders have limited liability, up to the amount of the capital they invest in the business; investors interested setting up a company in Oman will often chosen this business form.
- Stock company: formed by at least 3 ordinary individuals; there is the closed stock company and the general stock company; a minimum capital of 500,000 OR is required for companies that do not subscribe their shares.
Investors who open a company in Oman should take into account the required minimum capital, as well as the minimum number of founders needed to form a new legal entity. For most business purposes, the limited liability company is a popular and convenient choice.
Other options include the joint venture company as well as the company branch, which is an extension of a foreign company. Our Omani lawyer can give you more details about each of the aforementioned business forms.
If you are interested in immigration to Oman for the purpose of company creation, our team can answer your questions.
The main steps for company formation in Oman
Once investors choose the business form that will suit their business needs, the actual company formation process, which involves the registration of the new business, can begin.
Our lawyers in Oman list the following essential steps:
- Name registration: a unique commercial name is reserved for the company prior to commencing the procedures for starting a business in Oman; this is a quick process, usually finalized during the same and it is subject to certain requirements (see below);
- Documents: these are the company’s constitutive documents, accompanied by the founder’s identification documents;
- Company registration: the process of setting up a business in Oman requires business form, including branches of international companies, to obtain a commercial license; this is the commercial business registration phase;
- Licensing: in addition to the commercial registration, companies operating in selected business fields will need additional licenses and permits.
The trade name application is submitted through a law firm and our team of lawyers is ready to assist you with this initial step for company creation. Specific c rules apply in terms of company names, as well as restrictions to the use of certain words or names.
Most businesses required licensing in order to be able to engage in their specific activities in Oman. These permits are issued by the municipality and/or the Royal Oman Police. If you want to open a company and obtain business licenses in another country, such as UAE, we can put you in touch with our local partners. They can help you obtain the trade license for your company in Dubai in just a few weeks since you submit all the required documents.
Examples of activities that require special licensing include those in the import sector (for the import of livestock, plants, pesticides, etc.), commercial and recreational fishing, professionals in the medical and healthcare field (pharmacists, nurses, radiologists, laboratory technicians, etc.), as well as businesses that will engage in the insurance business.
As described above, company formation in Oman is a multi-step process during which local assistance may be required. We invite you to reach out to our lawyers if you have any questions.
We can also give you details about the visas required to enter the country, and about immigration to Oman.
Labor requirements when setting up a business in Oman
Once the company is duly registered and has the needed licenses and permits for functioning, investors can concentrate on recruiting staff.
Human resources management will be a constant issue to take into account when doing business in Oman and understanding the rules for hiring local and foreign staff is an important step.
An employment contract governs all relationships between employers and employees and, if this document is drawn up in another language, an accredited copy in Arabic is also required. Our Omani lawyers can help you draw up the agreement.
The main rules for employment in the Sultanate are outlined in the Omani Labor Law, as per the Royal Decree No. 35/2003. These apply to all companies unless specific exemptions apply in their case.
Omanis have priority in all areas of employment, however, rights are given equally to Omanis and foreign nationals. Nonetheless, companies are not permitted to employ foreign staff without first receiving approval from the Ministry of Manpower.
Investors who open a company in Oman can receive a license to hire foreign staff when:
- Omani manpower is insufficient for the job position(s);
- The employer has committed to the pre-determined percentage of employed Omanis.
Employers should also know that foreign nationals cannot work in Oman unless they have a labor card that is issued based on several criteria, including the employer’s authorization to hire the said employee. Therefore there needs to be a clear need for the company to hire a foreign employee and the latter’s right to work in Oman will depend on the company’s permission to hire such as employee.
As far as employee rights are concerned, the employer will need to observe the following:
- The business hours: employees work for no more than 9 active hours per day and no more than 48 hours a week (not including breaks); an important issue to keep in mind is that during Ramadan, working hours are reduced (6 per day or 36 per week for Muslims in the private sector);
- Wages: these differ in the private sector, however, employers are also expected to provide accommodation for the employees, along with transportation if this is required; the company is responsible for medical coverage and sending the employee back to his/her country;
- Employee taxes: there are no taxes on the salaries of employees in Oman;
- Others: as previously mentioned, labor licenses are mandatory; some foreign nationals who wish to work in the Sultanate can be subject to physical and medical evaluations; this requirement for physical fitness is also something employers need to take into account.
Our team can give you more information about the rules for hiring local and foreign employees as part of our services for newly incorporated companies.
Company taxation in Oman
Investors who open a company in Oman also need to comply with the applicable taxation and reporting requirements. We list the most important taxes for companies below:
- 15% corporate income tax rate applicable to all businesses, including branches;
- 5% standard value added tax which was recently introduced in the jurisdiction;
- 0% the reduced or zero-rated value added tax applicable to supplies such as financial or healthcare services, among others;
- 10.5% the employer’s social security contribution, calculated as a percentage of the monthly salary.
Contact our lawyers if you need additional information about the general requirements for company formation in Oman as well as to receive personalized assistance throughout the process.
Our immigration lawyers in Oman can also help you with details on how to move here.