Setting Up a Business in Oman with Different Entities

by Zaara 21, May 2020

Types of Business Entities in Oman

Should you operate your business in Oman as a foreign company or set up a Limited liability Company (LLC)? If this is your query, read along and find out in this blog post. 

The most common solution for this query usually is to set up a Limited Liability Company with an Omani, an American, or a GCC State national as a passive shareholder. However, one can set up a 100 percent foreign-owned company if they meet specific government requirements or if they incorporate the company in one of the country’s free zones.

Setting up a Company in Oman with a Local Entity

There are five types of local entities.

Sole Proprietorship in Oman

sole proprietorship in Oman or a one-person company can be opened with a sole director and no minimum paid-up share capital requirements. A one-person company is expected to become the most commonly used entity for foreigners via a simple corporate structure.       

The Oman LLC

A Limited Liability Company, where each of the shareholders’ liabilities is limited to their share in the company's capital. An LLC in Oman needs at least two people as its shareholders, one of whom should preferably belong to a GCC national or an American owning at least 30% of the company’s shares and one director (who can be one of the shareholders as well).

To form an Omani LLC, which is the most preferred company type by foreigners interested in setting up a company in Oman, the minimum capital required is 150,000 Omani Riyals, which is approximately 390,117 USD*. This type of business entity is beneficial for manufacturing and trading activities.

The Wholly Foreign-Owned LLC

Foreign nationals looking forward to setting up a company and owning 100% of the shares must seek approval from the Ministry of Commerce and Industry, obliging to the Omani laws. To get the approval, a company should submit a detailed business plan which has the details about the capital investment and the projected benefits to the country’s economy, including the number of local jobs to be created with its formation.

The company further must have at least two shareholders and one director and a minimum capital of one million Omani Riyals, which approximates to around 2600780 USD*.

The Oman Free Zone Company

An Oman Free Zone Company formation permits three primary criteria. I.  being wholly foreign-owned; II. being able to conduct business with local customers, and III. it does not require a minimum investment.

Free Zones are usually recommended for manufacturing companies wishing to use the country as a base to expand their operations in the Middle East.

The Joint Stock Company

A Joint Stock Company that trades its shares publicly is referred to as a Public Joint Stock Company (SAOG). An SAOG requires a minimum share capital of OR150,000, approximately 390,117 USD*.

However, a Joint Stock Company that does not offer shares to the public, known as a Private Stock Company (SAOC) requires a minimum capital of OR50,000, which approximates around 130,000 USD. Furthermore, the company also requires a minimum of three shareholders, one of whom must belong to Oman, holding 30% of the total company shares.

Any Joint-stock company, regardless of its type and having foreign national participation, must do the following two steps. Must seek approval from the Ministry of Commerce and Industry and have a minimum capital of OR150,000, approximately 390,117 USD*.

The Limited Partnership (LP)

An LP is a commercial company requiring a minimum of one general partner and one limited partner to be registered. LP is a modified general partnership.

A Limited partner is only liable for the partnership’s debt based on the capital they contributed, whereas the general partner is liable for the partnership’s liability to the full extent of the partnership’s investment. The Omani general partner is obliged to register the limited partnership entity with the Oman Commercial Register.

Starting a Business in Oman with a Foreign Entity

There are three types of foreign entities.

1. Branch Office

An extension of an international company that entered into a contract with the government or one of the bodies of the government and is entitled to register and operate a foreign branch in Oman. 

branch office in Oman also requires to obtain approval from the Oman Ministry of Commerce and Industry, and the license is valid only for the duration of the project. The Ministry requires a bank guarantee of 390,000 USD* for this process.

2. Representative Office

While the Omani representative branch office is wholly foreign-owned and controlled, it cannot carry on direct sales within Oman. The scope of an Omani representative office is limited to carrying out I. market research and II. parent company’s business promotions.

3. Commercial Agency

A foreign company interested in doing business in Oman but is not very keen on registering a local branch or company in the country is permitted to carry out business through local commercial agents.

An agreement with the local agency must be registered with the Oman Ministry of Commerce and Industry. Commercial agency clients still require to file corporate income tax and annual tax returns on their Omani income.

*Prices are subject to change. Kindly connect with us with confirmation.

Reasons to Avail Professional Services

Business owners prefer to utilize their time most wisely and productively. Hence, they focus on the following rights that provoke them to outsource the tasks to professional experts.

  • The tasks get completed at a faster pace.
  • The records are maintained in a professional manner
  • The legal documentation process gets handled
  • Minimizes the burden on the business owners and investors
  • Available resources can be utilized most productively.

We at Commitbiz are a committed team of experts helping a range of businesses turn our clients’ business dreams into reality. We work for various companies, from initial start-ups to multinational companies. 

We deliver services for your company needs in fields like incorporation needs, taxation, accounting, and legal services, legal documentation for your travels. For further information and assistance for your business needs in the UAE, do not hesitate to contact us.

FAQs

What are the foreign entities with which you can set up your business in Oman?

There are three types of foreign entities:

  • Branch office
  • Representative office
  • Commercial Agency.

Who can start a business with a commercial agency in Oman?

A foreign company interested in doing business in Oman but is not very keen on registering a local branch or company in the country is permitted to carry out business through local commercial agents.

What are the local entities with which you can set up your Omani business?

There are five types of local entities:

  • Sole Proprietorship
  • Limited Liability Company
  • Free Zone Company
  • Joint Stock Company
  • Limited Partnership.

Why should an entrepreneur avail professional service?

Professional services should be availed because of the following reasons:

  • The tasks get completed at a faster pace
  • The records are maintained in a professional manner
  • The legal documentation process gets handled
  • Minimizes the burden on the business owners and investors
  • Available resources can be utilized in the most productive way.

What are the requirements for a wholly foreign-owned LLC in Oman?

The company further must have at least two shareholders and one director and a minimum capital of one million Omani Riyals, which approximates to around 2600780 USD*.

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