Business Structure & Formation

Almost all kind of business structure is available in Oman as like another country too. Sole proprietorship, partnership (either general or limited liability partnership), agency or branch office and company. For company formation person can choose among its three types i.e. Limited Liability Company (LLC), closed joint stock company and the open joint stock company. The most popular form of business structure among company is limited liability company (LLC).

Limited Liability Company (LLC)

It must have a minimum of two and a maximum of 40 shareholders. It can undertake activities set out in the objects contained in the LLC's constitutive contract i.e. similar to Memorandum of Association (MOA)/Articles of Association (AOA). The minimum capital of an LLC is OMR 150,000.

Stepwise procedure to register LLC in Oman is listed below:-

1. Name Reservation

Applicant requires submitting application to Ministry of Commerce and Industry (MCI) under applicable law to reserve the name of company subject to restriction of uses of particular name as given in Omani Law.

2. MCI Application (Incorporation documents submission)

After approval and reservation of Name, now the next step is to prepare and obtain documents like foreign shareholder documents or Omani shareholder documents, Constitutive contract and authorized signatory form, bank certificate for evidence of compliance with LLC's capital requirements.

3. Oman Chamber of Commerce and Industry (OMCI) registration

This is the final step of registration process and is obtained immediately on the MCI completing its registration process to obey the other prescribed commercial rules and regulation for corporate in Oman.

4. Approvals

Depending on the size, nature and composition of business, further government approvals may require.

5. Company Seal

The instruction to make the company seal or stamp is issued by the registered authorized signatory of the LLC. When issued to the supplier of the stamp or seal, such instruction should be send with an attested signature specimen confirming the requesting persons' authority to obtain the stamp or seal.

6. Post registration

Once the LLC is registered the company will need to organize and obtain following registration or approval, as the case may be to run business/trade in Oman

1. Municipality license
2. Tax registration
3. Registration with Royal Oman Police
4. Registration with Ministry of Manpower, to apply for labor clearances and visas.
5. Import Export License, depending on the nature of business,
6. Industrial, environmental and other permits and licenses, depending on the nature of business.

Oman's income tax laws seek to tax the worldwide income of Omani Entities and the Oman-source income of branches and other permanent establishment. Rate of tax in Oman is nil up to First OMR 30,000 then above OMR 30,000 the rate of tax is 12%. However the company engaged in petroleum exploration will be charged to 55% of tax on income derived from sale of petroleum products.

Further, the foreigner has option of Branch office and Agency set up in Oman under applicable Omani Law to do trade/business in Oman briefed below.

Branch office

A company not formed in Oman which has entered into a contract with a government entity or quasi-government entity is authorized to operate with registration in Oman as a foreign branch. It can be interpreted as Branch is possible for foreigner provided they have secured contract from authority. The branch registration is dependent upon the term of the government contracts, which must also be registered. The branch office is not normally entitled to seek and carry out business within the private sector. A branch office is a ‘footprint’ of the foreign company in Oman. Therefore, this kind of corporate entity not required to have share capital and any local partner too. And the foreign company remains liable for all of the debts and other liabilities of the branch office.

Agency

Oman has many well-established local commercial and trading companies, some of which have grown into sizeable conglomerates with extensive local, regional and international business interests. Many of these entities are used to acting as agents or distributors for overseas companies. Foreign investors who wish to appoint an agent or distributor need to draft the agency or distribution agreement with care and take legal advice on the background legislation to these forms of contract because Oman’s Commercial Agencies Law provides an agent significant protection from the termination of its appointment by an overseas principal on due course of business.

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