Should you operate in Oman as a foreign company or should you set up an LLC in Oman in 2019? 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 per cent foreign-owned company if they meet specific government requirements, or if they incorporate the company in one of the country’s free zones.
So, the two primary options available for starting a business in Oman are either with a local entity or with a foreign body.
Setting up a Business in Oman with a Local Entity
1.The Omani Limited Liability Company(LLC)
A Limited Liability Company, where each of the shareholders’ liabilities, is limited to their share in the capital of the company. 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.
2.The wholly Foreign-Owned LLC
Foreign nationals looking forward to setting up a company and own 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 the 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.
3.The Oman Free Zone Company
A company that incorporates in one of the Omani Free Zones permits of three primary criteria. 1. being wholly foreign-owned; 2., being able to conduct business with local customers and 3. being it does not require a minimum investment.
Further exemptions for a free zone company in Oman are 1. Corporate Income Tax and 2. Have a lower requirement for employment of Omani workers (only 10%).
Free Zones are usually recommended for manufacturing companies wishing to use the country as a base to expand its operations in the Middle East.
4.The Joint Stock Company(SAO)
A Joint Stock Company that trades its shares publicly referred to as a Public Joint Stock Company (SAOG). An SAOG requires two main things. 1. 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 Private Stock Company (SAOC) requires a minimum capital of OR50,000, which approximates to 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
Must have a minimum capital of OR150,000, approximately 390,117 USD.
5.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.
Setting up a business in Oman with a Foreign Entity
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. A branch office also requires to obtain approval from MOCI, and the license is valid only for the duration of the project. For this process, the MOCI requires a bank guarantee of 390,000 USD.
2. Representative Office
While the Omani representative branch office is wholly foreign-owned and controlled, it is not allowed to carry on direct sales within Oman. The scope of an Omani representative office is limited to carry out- 1. market research and 2. parent company’s business promotions.
3. Commercial Agency
A foreign company interested to do business in Oman but is not very keen on registering a local branch or company in the country are permitted to carry out business through local commercial agents.
An agreement with the local agency must be registered with MOCI. The commercial agency clients still require to file corporate income tax and annual tax returns on their Omani income.
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