Starting a business in Oman is exciting, offering foreigners a gateway to a rapidly growing economy and strategic access to the Middle East market. One of the crucial decisions you must make before starting up a business in Oman is selecting the proper business structure. Expats are permitted to own 100% of a broad range of legal firms under Oman’s foreign investment law. The Omani government’s decision to allow 100% foreign ownership in some industries demonstrates the country’s openness to commerce.
In this blog, we will navigate through the process of starting a business in Oman as a foreigner.
Business Structures in Oman
Sole Proprietorship
It is the simplest form to start a business in Oman. In this business setup, individuals, without making a difference in law between their personal and corporate assets, own and manage the company. A sole proprietorship gives minimal liability protection even though it is simple to set up. All company debts and obligations are the owner’s responsibility, which may put personal assets at risk.
Advantages:
- Minimal regulatory requirements and easy-to-form
- Complete control and decision-making authority.
- There is no corporate income tax; profits are taxed individually.
- Low operational costs.
Disadvantages:
- Unlimited personal liability.
- Limited access to external funding.
- Limited growth potential.
Sole proprietorships are suitable for small, low-risk businesses, such as freelance work or consultancy services.
Limited Liability Company (LLC)
It is one of Oman’s most popular business structures, favored by local and foreign entrepreneurs. LLCs offer a balance between liability protection and operational flexibility.
Advantages:
- Limited liability protection, safeguarding personal assets.
- attractive to foreign investors, as foreign ownership is permitted.
- Flexibility in management structure.
- Access to local markets and government contracts.
- Tax benefits for Omanis and GCC nationals.
Disadvantages:
- Regulatory compliance requirements.
- Higher formation and maintenance costs compared to sole proprietorships.
- Restrictions on certain business activities for foreign investors.
LLCs are well-suited for businesses with multiple partners or those seeking to operate in Oman’s competitive market while maintaining limited liability.
Joint Stock Company (SAOG and SAOC)
Joint Stock Companies (SAOG – Public Joint Stock Company and SAOC – Closed Joint Stock Company) are suitable for larger businesses with substantial capital requirements. These structures are commonly used for publicly traded companies in Oman.
Advantages:
- Limited liability for shareholders.
- Access to public capital through IPOs.
- Attractive for businesses with high capital needs.
- Ability to issue different types of shares.
Disadvantages:
- Complex regulatory requirements.
- Strict disclosure and reporting obligations.
- Subject to stringent corporate governance standards.
SAOGs are suitable for companies planning to go public and raise capital from the public, while SAOCs are more suitable for private companies with a limited number of shareholders.
Branch Office
A branch office is an option for foreign businesses seeking to establish a presence in Oman without setting up a distinct legal company. A branch office carries out the parent company’s operations under its brand.
Advantages:
- No minimum capital requirement.
- Leverage the reputation and resources of the parent company.
- Access to Oman’s market without establishing a local entity.
- Simplified registration process for some industries.
Disadvantages:
- Stringent reporting and compliance requirements.
- Limited business activities, subject to approval.
- Limited access to government contracts.
Branch offices are ideal for foreign companies seeking to test the Omani market before committing to a full-scale subsidiary.
Holding Company
The main purpose of a holding company is to hold and oversee investments in other businesses. Although it doesn’t actively do business, it owns equity in a number of subsidiaries.
Advantages:
- Asset protection through limited liability.
- Efficient management of multiple business entities.
- Tax advantages related to dividend income.
- Flexibility in structuring subsidiary companies.
Disadvantages:
- Complex legal and financial structures.
- Limited engagement in operational activities.
- Regulatory compliance obligations.
- Potential tax complexities.
Holding companies are commonly used for investment purposes, portfolio diversification, and efficient management of various business interests.
Prerequisites for Company Formation in Oman
- Foreign Ownership: In Oman, most businesses are now operating and owned by foreign nationals. Outsiders or expats can enjoy 100% ownership of their businesses.
- Capital needs: Different capital needs apply depending on the nature of the company’s operation.
- Firm Activity Approval: Depending on the nature of the firm, certain business activities need extra permissions from appropriate government agencies, such as the Ministry of Health or the Royal Oman Police.
- Business Plan: For company creation in Oman, a thorough business plan, including the firm’s goals, market research, financial forecasts, and marketing strategy, is crucial. The business plan aids in proving to the authorities the feasibility and potential of the enterprise.
- Registered Office: The firm must have a physical location in Oman for its registered office. This address must be included in the leasing agreement since it will be used for formal correspondence.
Process of business setup in Oman
Documentation requirements
The required paperwork must be provided in order to start the process of incorporating a corporation in the nation. The following papers are required for this step:
- Certificate of Initial Deposit, Memorandum and Articles of Association
- Tax Registration Certificate
- Certificate of Chamber of Commerce and Industry Affiliation
- copies of shareholders’ passports and visas
- Filed company registration form
- Shareholder identification cards
These documents must be notarized, legalized, and attested by the nation of origin. You have to send these documents to the PPG in Oman by the relevant authority for legal translation and stamping.
Company incorporation
The relevant documentation must be submitted at this stage.
- Share Capital Certificate
- Municipality Approval
- Legalized Opening Forms
Post-Incorporation Process
Employee Registration
It is necessary to register all of the employees under the company name since they must be acknowledged as being a member of the corporate entity.
Apply for Visa
For all of your staff, submit visa applications through Visa services. Consult with visa consultants to receive the service more quickly.
Conversion of Bank Account
For each employee, submit a visa application through the Visa services. You could speak with visa advisors to get the service more quickly.
Conclusion
Selecting the proper business structure for 100% ownership business in Oman is a pivotal decision. It is necessary to take help from professionals and follow the rules and regulations to avoid any last-minute surprises. Our business setup advisor can help you achieve your business goals and navigate the process in an easier way. For more details, reach out to us www.bizvirtue.ae | info@bizvirtue.ae | +971 45 70 9205 | +971 54 793 5540
