Doing Business in Oman


The Commercial Code of Oman (“The Code”) provides that foreign nationals may not engage in commerce in the Sultanate of Oman except after obtaining “permission to do so in accordance with the applicable Laws”. Foreign companies may not establish a branch in the Sultanate or engage in Commerce except through an Omani local agent who is a merchant and in accordance with the rules set forth by the Law.

Royal Decree No. 102 / 94 relating to the Regulation of Foreign Capital Investment (Repealing Royal Decree No. 4 / 74) provide the general framework for foreign investment in Oman. In particular, it provides:

  1. Foreign nationals may not conduct any business activities or participate in an Omani company without obtaining a license to that effect from the Ministry of Commerce and Industry
  2. Licenses to conduct business in Oman are granted to Omani entities whose share capital is not less than OR 150,000 and in which the foreign participation is not more than 49%. The percentage of foreign ownership may be increased in certain situations.
  3. Foreign investors are permitted to own up to 100% of an entity provided it is engaged in a national economic development project that is approved by the National Development Council, and that it has a minimum capital investment of Omani Rial (OR) 500,000
  4. Foreign companies that have special contracts with the government, or provide services that are needed in Oman, are exempted from the requirement of obtaining a license
  5. All license applications are to be submitted to the Foreign Capital Investment Committee

The Forms of Entry

The following forms of entry into the Sultanate’s market are available to foreign nationals and foreign entities:

  1. Participation in a local commercial company
  2. Formation of a joint venture with a local partner
  3. Appointment of a local commercial agent
  4. Contracting with the public sector

Omani Commercial Companies

The Commercial Companies Code provides that commercial companies with non-Omani partners must comply with the Foreign Capital Investment law. The following types of commercial companies are open for foreign participation under the Commercial Companies Code.

A. Limited Liability Companies “LLC”

An LLC must have at least two partners (national or juristic persons). Their share capital may not be less than Omani Rial (OR) 10,000 when all partners are Omani and OR 150,000 if there is foreign participation. The capital is divided into equal parts that are not available for public subscription. The partners’ liability is limited to their share of the capital. An LLC may not engage in banking, financial guarantees, or commercial aviation activities. LLC’s are popular since they are relatively easy to form.

B. Joint Stock Companies

There are two types of joint stock companies permitted in Oman:

  1. Closed joint stock companies whose shares are not publicly traded (minimum capital OR 50,000)
  2. Public joint stock companies whose shares are publicly traded (minimum capital OR 150,000)

The minimum capital is set at OR 150,000 for both types of joint stock companies if there is foreign participation. The minimum par value per share is OR 1 and the maximum is OR 5. Joint stock companies may not be incorporated without the prior approval of the Ministry of Commerce and Industry and issuance of a license to that effect.


Joint Ventures

Joint ventures are regulated by the Commercial Companies Code. Joint ventures are not considered juristic persons under the law. Joint venture agreements are private arrangements, and thus, do not require public recording. An Omani partner must hold at least 51% ownership of the joint venture project.

If the joint venture conducts business with third parties as a joint venture, the transactions will be subject to the provisions of Al-Tadamon Company and the provisions of the general partner in a Tadamon Company. Tadamon companies are very similar to general partnerships in common law legal systems.

Commercial Agencies

An offshore company is specifically prohibited from engaging in industry, banking operations, insurance or any other commercial activity in Lebanon. It is also prohibited from earning any profits or revenues through movable or immovable assets in Lebanon, or through providing services to companies located in Lebanon, except for the interests on its bank accounts.

The activities of an offshore company are limited to the following:

  • Negotiating and concluding of contracts and agreements to be executed outside of Lebanon or in the free trade zone areas;
  • Storage of goods and products in customs free zone;
  • Preparation of studies or undertaking consulting for use abroad; and
  • Banking, financial and brokerage activities to be executed outside Lebanon.

The offshore company must be formed as a joint stock company and a bank guarantee of LL 100,000 (Approx. US $66.50) is required upon formation. At least two Lebanese nationals must occupy positions on the company’s Executive Board. The chairman may be a non-Lebanese resident abroad and may operate without a permit. The company must be registered both in the Commercial Register and in a special register for offshore companies.

Profits are tax exempt but the company is subject to an annual flat tax of LL 1,000,000 (Approx. US $666). The capital gains resulting from the sale of the offshore company’s fixed assets in Lebanon are taxed at a rate of 6 percent. The salaries and wages of the employees working at the offshore company are subject to taxes on wages and salaries at rates varying from 2 to 10 percent.

Public Sector Procurements

The Public Tenders Law governs public procurements in the Sultanate. Article 1 of the Public Tenders Law provides that all government procurement and public works contracts are to be governed by the Tenders Law and shall be conducted via a public tender with the exception of:

  1. Defense contracts and projects: The Ministry of Defense oversees defense procurement through an internal tenders committee.
  2. Specific exceptions provided for by the law: The law provides that, upon meeting certain criteria, Ministries may form their own internal tenders committees, contract directly with the supplier, or sole source.

The Tenders Committee is responsible for overseeing all government tenders. Persons who reside in the Sultanate and have an address to which a valid notice may be served are permitted to submit bids. Furthermore, the bidder must have a local agent or a sponsor who must be named in the bid. Tenders may also be submitted through local agents who must present a proper power of attorney duly authenticated from the bidder’s country.

Industrial Projects

Royal Decree No. 1/79 and the amendments thereto relating to the Encouragement and Regulation of Industrial projects provide various incentives for local industrial projects. These include tax holidays for five years; exemptions from export and import taxes and provision of utilities at reduced rates. Furthermore, the government gives preference to local products in its procurements.


A. There are no personal income taxes in Oman

Corporate income tax in Oman is regulated by the Corporate Income Tax Law. All corporate entities as defined in Article 2 of the Omani Commercial Companies Law are subject to corporate income tax. The law also applies to Omani joint ventures and any entity which has a “permanent presence” in Oman and is supported by a foreign entity, or which the Director of Taxes deems to be supported by a foreign entity.

 B. Exemptions and Tax Holidays

Corporations whose main object is manufacturing, agriculture, fishery, tourism, exportation of local products, public utility projects and infrastructure projects, as well as companies whose activities are deemed essential for economic development, may be exempted from tax for five years. These corporations may carry forward losses incurred during the five-year exemption period for as many years needed until the losses are set off against taxable income.

C. Withholding Tax

Royal Decree No. 89/96 provides that foreign companies without a permanent presence in Oman and who receive fees/income from management contracts, royalties, leases of equipment and machinery, technical expertise and/or research and development, will be subject to a withholding tax amounting to 10% of the total fees/income received.

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. IQTESADI does not accept any responsibility, legal or otherwise, for any errors or omission.