How to open a company in Oman as a foreigner

Oman, thanks to its strategic location, abundant natural resources, and ambitious development plans, is becoming a growing business hub. As part of its Vision 2040 strategy, the country aims to diversify its economy, and a number of sectors present attractive opportunities for investors.

If you're planning to open a business in Oman, it's crucial to understand the company registration process, documentation, legal requirements, and legal forms.

Advantages of Opening a Company in Oman

With investor-friendly policies, a growing non-oil economy, and access to regional and global markets, opening a business in Oman offers numerous advantages. These factors also contribute to the expanding range of business opportunities in the country.

• Strategic Location. Provides easy access to markets in the Gulf, Asia, and Africa.
• Investment-Friendly Ecosystem. Business-supportive policies, incentives, and various benefits encourage entrepreneurs to invest in Oman.
• Favorable Tax Regime. No personal income tax and a 15% corporate tax rate.
• Infrastructure. Access to modern seaports, roads, and airports.
• Diverse Economy. The country is driving growth in non-oil sectors such as tourism, logistics, and manufacturing.
• Profit Repatriation. Free transfer of capital and profits between countries.
• Full Ownership. 100% foreign ownership is permitted in many sectors.
• Free Trade Zones. Several free zones in Oman offer benefits such as duty-free imports and tax holidays.
• Skilled Workforce. The country offers a well-educated and skilled workforce.
• Stable Political Environment. A predictable and secure environment for long-term investment.

Business Structures

Limited Liability Company (LLC)

The most common and preferred form for small and medium-sized enterprises (SMEs) in mainland Oman. A minimum of two shareholders and one director are required. Foreign ownership is up to 70% and can be increased to 100% with special permission.

There are no minimum capital requirements for most sectors, but certain activities may require a higher minimum capital.

Free Zone Company (FZE/FZC)

Ideal for logistics, manufacturing, and export-oriented businesses seeking maximum incentives in regions such as Salalah, Sohar, and Duqm.

100% foreign ownership. Corporate tax holidays (up to 30 years). Zero import/export duties. Typically, minimum capital requirements are lower than those for LLCs in mainland Oman, typically between 15,000 and 50,000 OMR, depending on the specifics of the company's activities and the free zone jurisdiction.

Branch

Suitable for international companies implementing specific contracts (especially government projects) or specialized work in Oman. It is considered an extension of the parent company. The parent company bears full liability and must have significant capital and a proven operating history.

Sole Proprietorship Company (SPC)

This is a company with a single owner. The owner has complete control over the company.

Public Joint Stock Company (SAOG)

Designed for very large projects, allowing companies to raise capital publicly. Requires a minimum capital of OMR 2 million, at least three founders, and a board of directors consisting of at least three members.

Closed Joint Stock Company (SAOC)

Suitable for large projects requiring significant capital investment. Requires at least three shareholders and three directors, with a minimum capital of OMR 150,000.

Representative Office

A non-profit organization whose activities are limited to market research and product promotion. Commercial activities are not permitted.

Joint Venture

This involves a partnership with an Omani company, under which a contract is entered into defining the responsibilities of each partner.

While many industries are open to 100% foreign capital, some sectors are still reserved for Omani citizens. These include certain types of retail, transportation, and services.

Some activities, particularly consulting, still require a local partner.

Step-by-Step Guide to Company Registration in Oman

• Step 1 - Select your activity type

Select an activity type approved by MOCIIP and ensure it meets Oman's standard classification.

• Step 2 — Choose a company name

The name must be unique and comply with Omani business name laws. Avoid using religious or political terms.

• Step 3 — Draft the Memorandum of Understanding

The memorandum of understanding describes the ownership, management, and capital rights. It must be notarized and approved by the Ministry of Investment.

• Step 4 — Obtain initial approvals

Depending on the type of business, permits from relevant ministries (for example, in areas such as tourism, health, or industry) may be required.

• Step 5 — Capital Contribution

Deposit the required share capital to a local Omani bank and obtain a capital contribution certificate.

• Step 6 - Lease Office Space

Having a physical office address is mandatory for all businesses. The lease agreement must be registered with the local municipality.

• Step 7 - Apply for a Business License

Submit all documents to MOCIIP for license issuance.

• Step 8 - Register with the Oman Chamber of Commerce and Industry (OCCI)

Every company must register with the OCCI to receive commercial recognition.

• Step 9 - Tax and Labor Registration

Register with the Tax Office and the Ministry of Labor to legally hire employees.

Required Documents

To register a company in Oman, a foreign citizen will need to prepare the following package of documents.

Key documents for registration:

• Articles of Association.
• Application Form indicating the planned type of activity.
• Copies of passports of all founders and shareholders (color copies).
• Certificate of no criminal record for founders/shareholders.
• Bank reference (letter of recommendation from the bank) and/or confirmation of the required authorized capital in the account.
• Authorized representative form (power of attorney), if Registration is handled by a representative.
• Documents confirming the legal entity's address in Oman (office lease agreement, etc.).
• Permission from the Ministry of Commerce and Industry for the reserved company name.

Additional requirements:

• All foreign documents must be legalized (apostilled or certified by the Omani consulate) and translated into Arabic.
• Certain types of activities may require additional licenses and permits from the relevant government agencies.
• Although a personal visit to the country for registration itself is not required (this can be done through a representative), it will be required for obtaining a resident visa, Oman ID, and opening a personal bank account.

The registration procedure may differ slightly depending on the chosen legal form of the company (for example, a limited liability company or a free trade company). zone).

Types of Licenses Required to Open a Business in Oman

Obtaining the right business license is one of the most important steps when starting a business in Oman for foreigners. The type of license required depends on the nature of your business. Each license must be approved by the Ministry of Commerce, Industry, and Investment Promotion (MOCIIP) or the industry regulator.

Commercial License

A commercial license is required for companies engaged in trading and other commercial activities. This includes import, export, wholesale, and retail. Foreign investors planning to engage in the purchase and sale of goods, managing showrooms, or operating sales agencies must obtain this license. It also applies to e-commerce platforms that deal with physical goods.

Approved by MOCIIP and the Oman Chamber of Commerce and Industry (OCCI). Mandatory for businesses engaged in any type of commercial transactions.

Industrial License

An industrial license is required for businesses engaged in manufacturing or processing. These include factories, assembly plants, and industrial manufacturing facilities. Licenses are issued by the Ministry of Environment and Climate Protection to ensure compliance with safety and environmental standards.

Covers both large and small manufacturing operations. Site inspections, environmental assessments, and compliance with safety regulations are required. Suitable for investors in food processing, textiles, plastics manufacturing, and mechanical engineering.

Professional License

A professional license is issued to individuals or companies offering specialized professional services. These include consulting, legal, accounting, auditing, engineering, and IT services. The applicant must have relevant qualifications and experience in their field.

Best suited for service professionals and consulting firms. Some activities may require additional approval from the relevant ministry (e.g., legal services from the Ministry of Justice).

Tourism License

A tourism license is required for businesses operating in the tourism and hospitality sectors in Oman. These include hotels, resorts, tour operators, travel agencies, and event planners. The Ministry of Heritage and Tourism regulates the issuance of this license to ensure businesses meet tourism and hospitality standards.

Covers activities such as hotel management, travel booking, and excursion organization.

Real Estate License

A real estate business license is required for companies involved in construction, real estate brokerage, or facility management. The Ministry of Housing and Urban Planning oversees the issuance of this license.

Allows activities such as property rental, purchase and sale, and project management. Registration with the Real Estate Regulatory Authority is required. Required for foreign investors operating in commercial and residential real estate.

Post-Registration Requirements

Once you have successfully registered your company in Oman, you must comply with a number of requirements to ensure smooth operation. Here are some of them:

• Tax Registration and Filing of Returns

Companies must obtain a "tax card" from the Oman Tax Authority within 30 days of registration. The corporate income tax rate is 15%, and businesses are required to file tax returns annually.

• Renewal of Commercial Registration

After registering a company in Oman, businesses are required to renew their commercial registration annually. This can be done at the Ministry of Commerce, Industry, and Investment Promotion (MOCIIP). Failure to renew your registration may result in fines or suspension of operations.

• Value Added Tax in Oman

Companies operating in Oman must also consider their VAT (Value Added Tax) obligations. If your annual taxable income exceeds OMR 38,500, VAT registration with the Oman Tax Authority is mandatory.

• Accounting and Auditing Requirements

Once you begin operations, it is important to maintain proper financial records in accordance with International Financial Reporting Standards (IFRS). An annual financial audit is mandatory for most Omani companies, especially LLCs and larger enterprises.

• Social Security Registration

All employees are required to register with the Public Authority for Social Insurance (PASI) to pay social security contributions.

• Labor Compliance and Omanization

After registering a company in Oman, to legally operate, businesses are required to ensure ongoing compliance with labor laws and Omanization requirements. In Oman, labor laws are overseen by the Ministry of Labor. The Omanization Law was designed to encourage foreign investment and gradually localize the workforce through Omanization policies. However, during the first year of a company's operation, new investors can take advantage of an exemption from mandatory hiring of Omani citizens. This grace period allows companies to focus on launching production, attracting qualified specialists, and stabilizing their workforce.

At the same time, this helps investors avoid the immediate pressure of meeting national employment quotas. Starting in the second year, businesses are required to hire at least one Omani citizen. Specific Omanization targets may vary depending on the sector and size of the business. This initiative allows businesses to contribute to the country's economic development goals while keeping commitments realistic and achievable.

• Work Visas and Work Permits in Oman

Work visas and work permits in Oman can only be obtained after successfully registering a company in Oman, as a registered company is required to legally sponsor foreign employees. Oman has a streamlined process for hiring foreign specialists, making it easier for companies to access skills that may be unavailable in the local labor market. For companies doing business in Oman, obtaining work permits for foreign employees is a key step when specialized knowledge is required. This system supports the growing number of expatriates in Oman, who make a significant contribution to the country's workforce across various sectors.

Once a work permit is approved, the employer typically facilitates the acquisition of a residence visa, allowing the expatriate employee to legally reside and work in the country. This employer-managed process minimizes the administrative burden on employees and helps companies develop a skilled and diverse workforce.

Tax Reporting and Payments

As a result of Oman's efforts to modernize its tax system, corporate income tax registration has become a standard requirement for businesses operating in the country.

Under the Income Tax Law, all legal entities conducting business in Oman are required to register with the Oman Tax Authority (OTA), regardless of whether they generate taxable income or qualify for an exemption.

Tax Rates and Exemptions

Oman levies corporate income tax at a standard flat rate of 15% of net profit. There is no threshold for tax-free income.

However, small businesses owned by Omani citizens with revenues below a certain threshold may qualify for a reduced corporate tax rate of 3% in Oman, provided they meet strict criteria. This reduced rate does not apply to foreign-owned businesses, regardless of size or sector.

Corporate tax applies to all income derived from commercial activity in Oman, including income from services, consulting services, trading, and investment. Branches of foreign companies are taxed only on income related to their local operations.

Exceptions are provided for certain sectors and organizations, such as state-owned companies and qualifying investments, but they must still be declared as part of the standard registration procedure.

Tax holidays granted in free economic zones or under investment legislation do not waive the obligation to register or file tax returns. According to the Income Tax Act, compliance with these holidays remains in full force and effect.