How to set up a trading company in Oman
Oil and gas exports are the backbone of Oman’s economy and have historically accounted for a significant portion of the country's total revenue. According to data from the International Trade Administration, the Omani government generates approximately 70% of its annual budget from oil and gas revenues and the industry accounts for 30% of the country’s gross domestic product. However, the government has been working to diversify the economy and reduce the country’s reliance on oil and gas exports and through its Vision 2040 strategy, it has been implementing various measures to attract foreign investment in non-oil sectors, such as trade tourism, logistics and manufacturing. Setting up a trading company in Oman can be a lucrative investment opportunity with plenty of scope for expansion in the region and beyond.
What are the benefits of setting up a trading company in Oman?
Oman's coastline spans more than 1,700 km along the Arabian Sea, the Gulf of Oman, and the Strait of Hormuz, which is one of the world's most important shipping lanes. This strategic location at the intersection of Asia, Africa, and the Middle East, which makes it a gateway for trade between these regions.
The country’s long tradition of trade has led to the development of a modern and efficient infrastructure, including ports, airports, and highways, that is well-suited for modern trading activities.
Foreign investment initiatives
The establishment of special economic zones, such as the Duqm Special Economic Zone, the Salalah Free Zone, and the Sohar Free Zone has streamlined procedures for setting up and operating businesses and reduced the administrative burden that foreign investors often face when entering a new market. The country is also developing new logistics and industrial parks, such as the Logistics Park in Barka, which is designed to serve as a hub for warehousing, distribution, and light manufacturing.
Other financial benefits of free zone company setup include tax holidays, exemptions from customs duties and other fees, and the allowance for full repatriation of company profits.
To further facilitate foreign investment, the country has established the Public Authority for Investment Promotion and Export Development (Ithraa), which provides information on investment opportunities and assists with permits and approvals and offering support and guidance throughout the investment process. The recent launch of the ‘Invest Easy Portal’ also provides a valuable, single point of access registering a business, obtaining permits and licences, and submitting applications for government services.
In which jurisdictions can I set up a trading company in Oman?
Oman offers three free zones where companies can be established. These zones are physically situated within Oman but are regarded as separate legal entities, typically operating under their own regulatory statutes. In addition, thanks to a new foreign capital investment law, introduced in January 2020, it is now also possible to establish a mainland company with full foreign ownership for most trading activities. The previous minimum capital requirement of OMR 150,000 is also no longer generally required for LLC registration. However, some of these funds must be available as proof of sufficient working capital.
What type of corporate structures can be used in Oman?
The following are the mainland corporate vehicles that can be used by investors:
- Limited Liability Company (LLC): An LLC is the most common corporate structure used by foreign investors in Oman. It requires a minimum of two shareholders and allows the investors to limit their liability to the extent of their investment.
- Branch office: A branch office is an extension of a foreign company functioning in Oman. It lacks independent legal status from its parent company and must adhere to the same regulations and laws as the parent company.
- Joint venture: A joint venture is a business partnership between a foreign investor and an Omani partner. The foreign investor contributes the capital, technology, and expertise, while the Omani partner provides local knowledge and contacts.
- Public joint stock company: A public joint stock company is a corporate structure where the capital is divided into publicly traded shares. This type of structure is typically used for large-scale projects or when the investor wants to raise funds from the public.
- Closed joint stock company: A closed joint stock company is a corporate structure where the shares are not publicly traded. This type of structure is typically used for smaller-scale projects or when the investors are a small group of individuals.
- Sole establishment: In this type of business structure, the owner has full control and responsibility over the business and its operations. The proprietor is personally responsible for the debts and commitments of the business. However, it is generally only available to Omani, GCC or US citizens.
What are the main steps to set up a trading company in Oman?
- Identify the business activity: The initial step involves identifying the business activity that the company will engage in. This is important as the type of activity will determine the legal structure of the company and the necessary permits and licences required.
- Choose a legal structure: Once the business activity has been determined, the next step is to choose a legal structure for the company. You should consider what degree of ownership and control of the business is required and what legal liability and tax implications there are.
- Secure essential authorisations and licenses: Following the selection of the legal framework, the company needs to acquire the required approvals and permits from the pertinent governmental bodies. This process involves acquiring a Commercial Registration from the Ministry of Commerce and Industry and enrolling with the Oman Chamber of Commerce and Industry.
- Obtain a Foreign Capital Investment Approval: If the company is owned by foreign investors, they must obtain a Foreign Capital Investment Approval from the Ministry of Commerce and Industry.
- Register with the tax authorities: The company must register with the tax authorities and obtain a Tax Identification Number (TIN) from the Tax Authority in Oman.
- Open a bank account: The company must open a bank account with a local bank in Oman to deposit the share capital and conduct its financial transactions.
- Obtain necessary visas and permits: The company must obtain necessary visas and permits for its employees, such as a work visa and residence permit.
- Obtain necessary licences: Depending on the nature of the business activity, the company may need to obtain additional licences from other government authorities.
- Commence business operations: Once all the necessary approvals, permits, and licences have been obtained, the company can commence its business operations.
What documents are required to set up a company in Oman?
The documentation necessary for establishing a company in Oman may differ based on the chosen business type and legal framework. However, the following are some of the main ones which will be needed:
- Application form for commercial registration: This form is obtained from the Ministry of Commerce and Industry and includes information such as the business name, legal structure, business activities, and the names of the company's shareholders and directors.
- Articles of association: This document outlines the rules and regulations governing the company's operations, management structure, and shareholder rights. It must be signed by the company's shareholders and directors.
- Memorandum of association: This document outlines the company's goals and operations and needs to be signed by the company's shareholders and directors.
- Shareholder identification documents: All shareholders of the company must provide identification documents such as a passport or national ID card.
- Proof of share capital: The company must provide proof of the share capital that has been deposited in a local bank account in Oman.
- Lease agreement: The company must provide a copy of the lease agreement for the office or commercial space where the business will be located.
- Foreign capital investment approval: If the company is owned by foreign investors, they must provide a Foreign Capital Investment Approval from the Ministry of Commerce and Industry.
- Tax identification number application: The company must provide an application for a Tax Identification Number (TIN) from the Tax Authority in Oman.
- Work visas and residence permits: The company must provide work visas and residence permits for its employees.
Company registration in Oman as a foreign investor can be challenging. The administrative procedures can be lengthy and time-consuming, and investors may find it difficult to navigate the legal and regulatory framework alone. It is recommended to seek the assistance of a reputable corporate services provider to ensure that all the necessary steps and requirements are properly followed, and unforeseen delays or additional costs can be avoided.
How can PRO Partner Group help?
Through years of local industry experience, we have built enduring relationships with key government bodies and have extensive knowledge of laws and company incorporation requirements in Oman.
We can assist you to set up your trading company in Oman and we can also provide you with PRO Services, visa support for staff and family members and assistance with licensing and regulatory matters. If you need assistance on this or any other related company set up, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, KSA, Bahrain or Qatar then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below.