April 7, 2025
Business

Business Setup in Oman Guide – 2025

Oman, a thriving hub in the Gulf Cooperation Council (GCC), offers a strategic location, investor-friendly policies, and a growing economy, making it an attractive destination for business setup. With its Vision 2040 plan driving diversification beyond oil, Oman welcomes entrepreneurs and corporations alike. Whether you’re launching a startup, an SME, or a multinational branch, this guide walks you through the essentials of setting up a business in Oman—covering legal structures, registration, taxes, and practical tips.

Why Choose Oman for Business?

Oman’s appeal lies in its blend of opportunity and stability:

  • Strategic Location: Positioned at the crossroads of Asia, Africa, and Europe, with access to the Arabian Sea and key ports like Salalah and Duqm.
  • Economic Diversification: Vision 2040 prioritizes sectors like tourism, manufacturing, logistics, and technology, reducing oil reliance.
  • Foreign Investment: 100% foreign ownership is now allowed in most sectors (per Royal Decree 50/2019), easing restrictions.
  • Tax Incentives: No personal income tax, a low 5% VAT (since April 2021), and corporate tax rates of 15% (or 3% for SMEs).
  • Infrastructure: Modern free zones (e.g., Duqm SEZ) and industrial estates offer tax holidays and streamlined processes.

For example, a logistics firm can leverage Oman’s ports for exports while enjoying zero-rated VAT on international shipments, making it a cost-effective base.

Legal Structures for Businesses in Oman

Choosing the right business structure in Oman depends on your goals, capital, and ownership preferences. Options include:

  1. Limited Liability Company (LLC)
    • Overview: Most popular for small to medium businesses; requires at least two shareholders (can be 100% foreign-owned in many sectors).
    • Capital: Minimum OMR 20,000 for foreign investors (previously OMR 150,000, reduced in 2019).
    • Liability: Limited to the capital invested.
    • Example: A Muscat retail startup with two partners setting up a store.
  2. Sole Proprietorship
    • Overview: Ideal for individual entrepreneurs; limited to Omanis or GCC nationals in most cases.
    • Capital: No fixed minimum, but sufficient for the activity.
    • Liability: Unlimited—personal assets are at risk.
    • Example: An Omani freelancer offering consulting services.
  3. Branch Office
    • Overview: For foreign companies establishing a presence; requires a contract (e.g., government project).
    • Capital: No specific requirement, but operational funds needed.
    • Liability: Parent company bears responsibility.
    • Example: A UAE construction firm opening a branch in Sohar.
  4. Representative Office
    • Overview: For market research or promotion, not profit-making activities.
    • Capital: Minimal, for operational costs.
    • Example: A tech firm exploring Oman’s IT market.
  5. Free Zone Company
    • Overview: In zones like Duqm SEZ or Salalah Free Zone; 100% foreign ownership, tax exemptions (up to 30 years), and no customs duties.
    • Capital: Varies by zone (e.g., OMR 20,000 in Duqm).
    • Example: An exporter in Duqm shipping goods globally.

The Ministry of Commerce, Industry, and Investment Promotion (MoCIIP) oversees approvals, with free zones offering faster setup.

Steps to Set Up a Business in Oman

Setting up a business in Oman involves a structured process, typically completed within weeks if prepared properly:

  1. Choose Your Activity and Structure
    • Select your business type (e.g., LLC) and activity (e.g., trading, manufacturing). Check MoCIIP’s approved list—some sectors (e.g., oil exploration) still require Omani partners.
  2. Reserve a Company Name
    • Submit three unique names via the Invest Easy portal (investeasy.gov.om). Names must align with Omani culture (e.g., no offensive terms).
  3. Obtain Initial Approvals
    • Register with MoCIIP via Invest Easy, uploading:
      • Passport/ID copies of shareholders.
      • Proposed business plan or activity details.
      • Capital proof (e.g., bank certificate for OMR 20,000).
    • Free zone businesses apply directly to the zone authority.
  4. Secure a Commercial Registration (CR)
    • Once approved, you’ll receive a CR number, formalizing your entity. This takes 3-7 days online.
  5. Lease Office Space
    • Rent a physical location (required for most setups outside free zones). Costs vary—e.g., OMR 300/month in Muscat for a small office.
  6. Register with the Oman Chamber of Commerce and Industry (OCCI)
    • Mandatory for all businesses; fees start at OMR 50 annually, based on capital.
  7. Obtain Licenses and Permits
    • Sector-specific permits (e.g., health for restaurants) from ministries like Health or Environment. Free zones bundle these.
  8. Open a Bank Account
    • Deposit capital in an Omani bank (e.g., Bank Muscat). Provide CR and licenses.
  9. Tax Registration
    • Register with the Oman Tax Authority (OTA) for a Tax Identification Number (TIN) via taxoman.gov.om. Mandatory for VAT (OMR 38,500 turnover) and corporate tax.
  10. Hire Staff and Visa Processing
    • Apply for employee visas via the Royal Oman Police (ROP) portal. Foreign workers need sponsorship; Omanisation rules require local hires in certain roles.

For instance, a tech LLC in Muscat might reserve “TechTrend Oman,” secure CR in a week, lease an office for OMR 500/month, and register for VAT—all within a month.

Tax Considerations in Oman

Oman’s tax system is business-friendly but requires compliance:

  • VAT: 5% on most goods/services; zero-rated for exports, food, and medicines; exempt for healthcare and education. File quarterly within 30 days.
  • Corporate Tax: 15% on profits (3% for SMEs with OMR 150,000 income cap, OMR 60,000 capital); 55% for petroleum firms. Annual returns due four months post-year-end (e.g., April 30).
  • Withholding Tax: 10% on payments to foreign entities (e.g., royalties), unless reduced by tax treaties.
  • Free Zone Benefits: Up to 30-year tax holidays in Duqm SEZ or Salalah.

A retailer earning OMR 50,000 profit pays OMR 7,500 (15%) or OMR 1,500 (3% if SME), plus OMR 2,500 VAT quarterly—manageable with proper planning.

Costs of Business Setup in Oman

Costs vary by structure and location:

  • LLC: OMR 20,000 capital + OMR 500-1,000 registration fees.
  • Free Zone: OMR 20,000 capital + zone fees (e.g., OMR 1,000 in Duqm).
  • Office Rent: OMR 300-1,000/month (Muscat vs. smaller cities).
  • Licenses: OMR 100-500, depending on activity.
  • Visa Fees: OMR 20-50 per employee.

Total startup costs for an LLC might range from OMR 21,000-25,000, lower in free zones.

Practical Tips for Success in Oman

  • Hire Local Expertise: Firms like Xact Auditing can handle registration, VAT, and tax filings, saving time and avoiding penalties (e.g., OMR 5,000 for late VAT).
  • Understand Omanisation: Comply with local hiring quotas (e.g., 13% in private sectors).
  • Leverage Free Zones: Duqm SEZ offers tax breaks and logistics perks for exporters.
  • Network: Join OCCI events to connect with partners and clients.
  • Digital Tools: Use Invest Easy and OTA portals for efficiency.

Conclusion

Setting up a business in Oman is a straightforward yet rewarding endeavor, thanks to streamlined processes, low taxes, and a supportive economic vision. Whether you’re opening a retail store in Muscat, a factory in Sohar, or an export hub in Duqm, Oman offers the tools to succeed. Partner with experts like Xact Auditing to navigate registration, secure your TIN, and stay compliant with VAT and corporate tax—turning your business vision into reality in the Sultanate.