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THE LEGAL ASPECTS OF DOING BUSINESS IN OMAN. Primer: Said Al Shahry Law Office’s “A Legal Guide To Doing Business In Oman”. EXCHANGE RATE. RO1 = US$2.60 (Fixed Rate) RO1 = S$3.80 (Approximate) RO1 = RM9.17 (Approximate). Gulf Cooperation Council (“GCC”).

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the legal aspects of doing business in oman

THE LEGAL ASPECTS OF DOING BUSINESS IN OMAN

Primer: Said Al Shahry Law Office’s

“A Legal Guide To Doing Business In Oman”

exchange rate
EXCHANGE RATE
  • RO1 = US$2.60 (Fixed Rate)
  • RO1 = S$3.80 (Approximate)
  • RO1 = RM9.17 (Approximate)
gulf cooperation council gcc
Gulf Cooperation Council (“GCC”)
  • A trade bloc involving the six Arab states of the Arabian Gulf:
    • Bahrain;
    • Kuwait;
    • Oman;
    • Qatar;
    • Saudi Arabia; and
    • the United Arab Emirates
usa oman free trade agreement
USA Oman Free Trade Agreement
  • Duty-free access to the US market;
  • Expansion of Omani's services sector through cross-border supply of services or through establishment in the US.
  • Removal of barriers to inward investment by US investors, creates opportunities for partnering and other business arrangement, facilitates exchange of technology, know-how and expertise.
slide6

General Partnership Company

Limited Partnership Company

Joint Stock Company (“JSC”)

Limited Liability Company (“LLC”)

Holding Company

Joint Venture (“JV”)

Branch of a Foreign Company

Commercial Agent

Commercial Representative Office (“CRO”)

1 general partnership company
1. General Partnership Company
  • Two or more persons.
  • Partners jointly and severally liable for company’s debts to the full extent of their property.
2 limited partnership company
2. Limited Partnership Company
  • One or more general partners, who are jointly and severally liable for the company’s debts, to the full extent of their property;

or  

  • One or more limited partners, whose liability for the partnership company’s debts is limited to the amount of their contribution to the partnership company’s capital.
3 joint stock company jsc
3. Joint Stock Company (“JSC”)
  • SAOC (Société Anonyme Omanaise Close) - “closed” joint stock company; or
  • SAOG (Société Anonyme Omanaise Générale) - “public” joint stock company (Muscat Securities Market).
  • Minimum three persons but JSC formed by the government an exception to this rule.
  • SAOC - minimum issued capital of RO500,000. SAOG - minimum issued capital of RO2 million.
4 limited liability company llc
4. Limited Liability Company (“LLC”)
  • Minimum two members, characteristics of a partnership, fixed capital divided into shares;
  • No company directors or board of directors;
  • Non-Omani shareholder cannot hold more than 70% whilst Omani shareholder holds balance 30% - Mixed LLC;
  • Minimum issued capital for Omani LLC is RO20,000, for mixed LLC it’s RO150,000.
5 holding company
5. Holding Company
  • Either a JSC or a LLC which financially and administratively controls one or more other companies;
  • Subsidiaries of a holding company if the latter owns at least 51% of the shares;
  • Capital of a holding company must not be less than RO2,000,000.
6 joint venture jv
6. Joint Venture (“JV”)
  • Commercial company, min two persons, Omani nationals or Omani companies;
  • No separate legal personality, no entity or name of its own;
  • Contract defining objectives and terms of JV between its members;
  • JV’s existence no defence against 3rd party claims, 3rd party can only claim against the JV member they deal with.
7 foreign company branch
7. Foreign Company Branch
  • Foreign company branch allowed if contract with government (“Qualifying Contract”);
  • Registration relates only to that specific contract and effective for its duration;
  • Operates as a permanent establishment without Omani participation;
  • Does not require a dedicated capital except in the case of foreign banks.
8 commercial agent
8. Commercial Agent
  • For foreign companies exporting goods and services to Oman without a permanent operation in Oman;
  • Agent must be Omani national or business with minimum 51% Omani participation;
  • Commercial agencies and commercial agency contracts must be registered with MOCI in order to be enforceable in Omani courts.
9 commercial representative office cro
9. Commercial Representative Office (“CRO”)
  • Foreign companies may open representative offices in Oman but their activities limited to:

- establishing contacts with local suppliers;

- promoting their company’s products; and

- receiving complaints from local customer.

  • Does not require an Omani agent or sponsor;
  • CRO cannot import, export or sell products or services.
1 taxes on companies
1. Taxes On Companies
  • Corporate income tax chargeable on income realized or arising in Oman;
  • Non-resident parties in Omani contracts for supply & installation, know-how & management services, leasing agreements for plant & equipment – carried on in Oman?;
  • Offshore income, eg. Investment dividends may also be taxable;
  • Capital gains mainly not chargeable as taxable income of company.
slide18

LLC and SAOC, taxes levied on corporate profits exceeding RO30,000:

  • Wholly owned by Omani nationals, 12%;
  • Wholly owned by 100% GCC entities, 12%;
  • All shares owned by Omani nationals and GCC entities, 12%;
  • Not more than 70% of shares owned by non-GCC entities, 12%;
  • More than 70% of shares owned by non-GCC entities, in accordance with table (pg 10 primer).
2 taxes on individuals
2. Taxes On Individuals
  • No Income Tax.
  • No Capital Gains Tax.

WYEIWYG

(What You Earn Is What You Get)

3 withholding tax
3. Withholding Tax
  • Payable by foreign companies with no permanent establishment in Oman but derive income from: 
    • royalties (as one-off or series of payments);
    • management fees;
    • lease of machinery or equipment;
    • payments for transfer of technical expertise;
    • payments for research and development.

10% charged on gross amounts paid to them.

4 other taxes
4. Other Taxes
  • Social Security

- Omani employees aged 15 - 59;

- 9.5% (employers) and 6.5% of basic salary.

  • Dividends - no withholding taxes.
  • Lease Agreements

- 0.5% tax if more than 7 years.

  • Various Municipality Taxes
  • No Sales Tax or Value Added Tax

- but GCC VAT maybe introduced soon.

slide22

Allowable Deductions for Companies

Double Taxation

Company Accounts

Penalties

categories
Categories
  • GCC Custom Union – 1st Jan 2003.
  • GCC products duty free. Non-GCC states have 5% duty unless exempted goods.
  • High duty – 100% on pork, alcohol, tobacco.
  • 10% price preference given to Omani products on government purchases and to foreign industrial producers in JVs with Omani companies.
oman usa free trade agreement
Oman & USA Free Trade Agreement
  • In force 1st Jan 2009. Almost all Omani consumer and industrial products duty free in US, and vice versa.
  • Investment provisions strengthen protections for U.S. investors operating in Oman.
  • Provisions on intellectual property rights, government procurement, labour, environment, and dispute settlement to improve bilateral trade and investment.
slide27

Signatory to all important IP treaties.

  • World Intellectual Property Organisation – 1997
  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”)
  • World Trade Organisation (“WTO”) – 2000
  • Oman Copyright Law 1996, reenacted 2000
  • Oman Industrial Property Rights Law – 2008
1 immigration
1. IMMIGRATION
  • Single Entry Visa
    • Combined tourist, business, short visit visa.
    • 1 month.
  • Employment Visa
    • Omani sponsor required.
    • 2 years and renewable.
2 employment
2. EMPLOYMENT
  • Expatriate and Labour Clearance
  • Basic Elements of Employment Contract
  • Termination
  • Public Authority for Social Insurance
  • End of Service Benefits
3 omanisation
3. OMANISATION
  • Support employment of Omani citizens
  • Omanisation Percentages (4 years period min)
  • Omnisation Plan
slide33

Only Omani and GCC individuals, and 100% owned companies allowed to own property.

  • Non-GCC nationals allowed to own property in Integrated Tourism Complexes.
  • Tenancy (Residential and Commercial)
slide35

Arbitration Law (UNCITRAL Model Arbitration law) and Foreign Awards Law.

  • Preferred method for commercial disputes resolution in building, construction, oil & gas, project financing.
  • Choice of substantive law.
  • Conducted in Arabic unless parties agree otherwise.
  • Omani Courts rarely interfere in an arbitration.
  • UN Agreement on Recognition & Enforcement of Foreign Arbitration Awards – New York Convention (accession 1996).