Oman is a relatively easy place to do business. The Sultanate of Oman stands with a favourable ranking in international business surveys. Notably, the country ranked 71st out of 190 countries in the World Bank’s Ease of Doing Businesses rankings for 2018; faring well for factors like starting a business (31st) and paying taxes (11th).
Business Culture in Oman
It is essential to understand that to survive and flourish a company in any country, having a complete idea about the nation’s business culture and be open to new concepts. Let us help you understand it better to help you with your company’s future.
Before moving to that, let us make it clear that Oman stands in a high-income category with four free zones and a more number of business opportunities.
The management style that predominates in the Sultanate of Oman is hierarchical, though perhaps slightly less top-down than in some of its neighbouring countries. For the most, the decisions made at the top-level management are direct instructions given to the staff to follow.
The Islamic Sharia law is the source of all legalisation in the country, with most of its laws based on a common law system. The Sultanate of Oman has stringent laws and regulations that are amended continuously to offer a flexible and updated legal framework to run a business in Oman. The country’s commercial courts decide business disputes.
There are two vital legal structures for foreign companies in Oman, providing either a direct or indirect business presence in the country. A direct presence is availed through a corporate entity, whereas an indirect presence can be availed through commercial agents.
The Commercial Companies Law of Oman offers a broad range of partnership facilities to choose from for a foreign company. The options available are as follows.
- General Partnership
- Limited Partnership
- Joint Venture Company/ Joint Participation
- Limited Liability Company (LLC)
- Joint Stock Company
- Holding Company
- Branch Office
- Representative Office
LLCs are directed by their authorised managers whose authority to bind the Limited Liability Company is set out on the Consumer Report and in the constitutive contract of the LLC, as agreed by the company’s partners or shareholders. The authorised managers often appoint a manager to deal with the day-to-day operational management of the LLC under the authorised manager’s direction. However, the authorised manager can be a resident overseas but may be required to occasionally attend before a specific authority in Oman to complete certain registrations or acts.
Personal income is currently subject to income taxes in the country. Accordingly, individuals do not require to file income tax returns, and the concept of tax residency is not presently defined for individuals. Currently, the only main tax cost to Oman businesses is the corporate income tax at a rate of 15% on all taxable profits. A special provisional rate of 55% applies to income derived from the sale of petroleum. Having a word with the taxation service firm is advised.
Omani law makes it a prerequisite that in private sectors, Omani employees must be insured against disability, death, old age, and occupational injuries and diseases by the Public Authority for Social Insurance (PASI). Private-sector employers should make a monthly contribution to the PASI at a rate of 10.5% of each Omani employee’s monthly basic salary.
Non-Omani GCC nationals working in Oman have contributions made to PASI at a rate equivalent to their home jurisdiction, with their base jurisdiction making up any shortfall due to their home benefits being exceedingly generous than the Omani scheme.
Oman has established a special zone and three free zones, each of which is established by a special law prescribing the permitted activities and special benefits. While there are a few differences, free zones generally allow foreign owners to have 100% ownership of the company. Lower Omanisation requirements, duty-free imports and exports, tax-free holidays, no minimum capital investment requirements, and no restrictions on repatriation of capital, investments or profits.
Oman offers business in free zones like Salalah Free Zone, SEZD, Sohar Port and Free Zone, and Al Mazunah Free Zone.
●No Custom Duties on Exports
The Sultanate of Oman is a part of the Gulf Cooperation Council (GCC) Union. The implementation of the GCC Customs Union that was established in 2003 to remove customs and trade barriers among the GCC member states is still in progress.
The GCC states apply a Common Customs Law and a Unified Customs Tariff with a standard custom duty rate of 5% of goods’ cost, freight value and insurance, with some exceptions like tobacco and alcoholic goods (they are subjected to 100% customs duty rate).
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