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Establishing a business in Oman

Updated 13 Jan 2020

Oman is bordered by the United Arab Emirates (UAE) to the north-west, Saudi Arabia to the west and Yemen to the South West. The capital city Muscat is located on the South East coast, the main cities Sohar and Sur in the North and Salalah in the South. Oman has a beautiful coastline. The landscape is varied, central Oman is mostly desert and there are dramatic mountain ranges along the north and south-east coasts. Oman has a population of 4.6 million. 

In response to the growth and expansion of Oman as a competitive global economic hub under the leadership of Sultan Haitham, the government strives to represent, support and protect the interests of the business community. Politics in Oman take place in a framework of an absolute monarchy, whereby the Sultan of Oman is the head of state and the head of government. Oman has strong laws and regulations, which are constantly amended to provide a flexible and up-to-date legal framework to do business in.

According to international indices, Oman is one of the most developed and stable countries in the Arab world. The country’s political and social fabric is very strong and the government’s focus is on social and economic growth and development.

Besides oil and gas, which is the main source of income for the government of Oman, Oman is progressively developing the sectors of fisheries, agriculture and mining as other sources of income and encourages foreign investors to invest in those fields. The government of Oman is making huge investments in a public transportation network, including a railway project to connect Oman with the other GCC member states, providing another option for the movement of people and goods between the Gulf States.

Establishment options in Oman

There are several different options to consider when establishing a business in Oman. Expats should choose the option that best suits their needs.

Onshore business formation in Oman

Limited Liability Company (LLC)

A Limited Liability Company ‘LLC’ is the most popular form of company establishment in Oman. An LLC must have a minimum of two and a maximum of 40 shareholders, and the minimum share capital of an LLC with foreign shareholding is $390,000.

Unlike other GCC countries, foreign shareholders may own up to 70 percent of the shares in an Omani LLC. Shareholders from the GCC and the US, benefit from a free trade agreement and may, at the discretion of the Ministry of Commerce and Industry, have a 100 per cent shareholding.

The management of an LLC is carried out by a manager, or managers, who must be natural persons and may or may not be shareholders. Omani law does not provide for an LLC to have a board of directors, although a board can be established by way of contract, such as a shareholder agreement.

The LLC structure suits a small operation with a limited number of promoters.

Branch Office

A foreign company which is performing a specific contract in Oman may set up a branch office if the project "facilitates the performance of a public service or utility," i.e. has a contract with a Government or quasi-government entity.

The branch registration is dependent upon the term of the government contracts, which must also be registered. The branch office is not normally entitled to seek and carry out business within the private sector.

In this case, there is no need for an Omani partner and the foreign party can own 100% of the business. Accordingly, this kind of corporate entity requires neither share capital nor a local partner. However, a branch office is only entitled to perform the specific contract for which it is registered.

Representative Trade Office

This can be used to promote a foreign company in Oman and introduce its products to Omani companies as a non-trading ‘shop-window’.

Representative offices are governed by the Representative Office Regulatory Law. A representative office of a foreign company is legally distinct from a branch office of a foreign company in that it is only permitted to promote its parent company’s activities. Therefore, if a parent company deals in the sale and/or production of certain products and opens a representative office in Oman, the office can only promote and market the sale and/or production of such products and facilitate contracts in Oman.

The Trade Representative Office is allowed to perform in the following manner:

  • Contact clients to acquaint them with its foreign establishment and companies that it represents their services and production to widen its distribution circle.
  • Contact exporters and the sellers of materials and semi-manufactured material needed by the authorities it represents and remove barriers that obstruct the arrival of these materials to the authorities quickly.
  • Inform the authorities that it represents about the complaints it receives on its products, and to soften any difficulties related to the distribution of the products.

The Trade Representative Office is forbidden to do the following:

  • Export, import or sell except what it imports of the commercial samples of goods that are manufactured by the company or establishment that it represents for the sake of promotion.
  • Obtain credit facilities
  • Promote products and/or services that are not manufactured or presented by the company or establishment that it represents.
  • Make contact directly with consumers.

Again, there is no need for an Omani partner and the foreign party can own 100% of the business. However, this is not an option for many companies who are looking to trade in products and services delivered in Oman.

Free Zones in Oman

The free zones in Oman mainly focus on industry, logistics, petrochemicals and metals and are all situated away from Muscat. There are four operational free zones in Oman:

Freezone Sohar

Located 220 kilometres north-west of Muscat, Freezone Sohar is situated next to Sohar port. The zone affords easy access to the East African coast and the Indian subcontinent, and offers plentiful land on which to build units.

Southern port of Salalah

The Salalah Free Zone offers office space for rental, as well as business incubators within its newly opened headquarters. There is also access to a deep sea port and international airport.

Duqm Special Economic Zone

The free zone comprises a seaport, industrial area, town, fishing harbour, tourist zone, logistics centre and an education and training zone. It has a land area of 1,777 square kilometres and 80km of coastline.

Al-Mazunah free zone

This free zone is located 4km from the border with Yemen and 14km from the Yemeni city of Shahn. It comprises approximately 3 million square metres, built at a cost of RO680m ($1.8bn). This zone offers warehouses, an industrial area, showrooms, an administrative centre, a hotel and business centre, a commercial mall, residential buildings, animal and livestock resources and car trading stores. Plots range from 2,000-16,000 square metres, across 100 sectioned areas.

Things to consider when starting a business in Oman 

Choose the correct Omani partner

The Omani partner can be in the form of an individual Omani or a 100% fully owned Omani company. Having an Omani company as a partner is often a more secure and robust solution for the foreign company, and there are several companies which have been established with the sole purpose of assisting foreign entities establish a business presence in Oman.

It is also worth noting that, should a business fail, there is a personal risk to the owner, since debt and financial irregularities are considered to be serious offences, and the person may not be allowed to leave the country. This risk is greater if loans have been taken out from Oman-based banks rather than home-country ones.

Other Considerations

Once a company is established, it will need to apply for work permits and labour clearances. The process of applying for work permits for expatriates is tightly regulated by the Ministry of Manpower and is granted upon certain conditions being met, including the skills of the proposed employee, as well as with regard to the state’s Omanisation policy (the aim of Omanisation is to limit the sultanate’s dependence on expatriate staff – different sectors of industry are given different Omanisation thresholds). Failure to meet Omanisation targets can give rise to the company being fined, as well as being blocked from carrying out labour clearances.

The current rate of tax for all Omani companies, regardless of foreign ownership, is 12 per cent on earnings above RO30,000.

The country is an evolving market for a broad spectrum of businesses. The government is committed to steady progress, diversification and the involvement of the international and local private sectors, and the legal framework is continually developing to improve and support foreign investment.

Next steps

If you are looking to establish your company in Oman and would like further information and a consultation with one of our experts, please contact PRO Partner Group on and we will happily discuss your establishment options further.

PRO Partner Group provide advice in the early stages of the company formation decision process.  We can assist clients looking at a Free Zone set up and also assist with Onshore formation.

As well as formation of companies we also undertake PRO work obtaining the relevant licences, visas, approvals and renewals etc.

We have formed over 200 Limited Liability Companies, Representative Offices and Branch Offices, and we collectively have over 40 years of experience in the region.

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