Corporate Structures in Oman

The mixture of a budding, prosperous population and a modern economy, in Oman, offers plenty of business opportunities to individuals and companies from around the world to take advantage of these opportunities. The Sultanate of Oman has places many strong incentive schemes which attract foreign investors to invest in the country, ranging from exclusions of customs duty and income tax to subsidized interest rates.  

In the last 40 years, The Sultanate has made substantial headway towards the growth and prosperity of the economy and has strived hard to make it Oman a paradise for the domestic and foreign investors alike. Setting up a business in Oman is easier and profitable, but you need to decide the type of the business entity you need to set up. The entity should be able to suit your needs so that you could make the most of the various advantages the Omani government provides.

 Let’s have a look at the various types of business entities one may choose to initiate a company in Oman:

1.Sole Proprietor

A sole proprietorship is a business procedure in which a trade license is issued in the name of the owner and does the trading in that name. The sole proprietor is liable for any liabilities of the business. The capital requirement is relatively low (minimum OR 3,000). It is a common practice in Oman to initially establish a sole proprietorship and later convert it into a limited liability company (“LLC”). For a better understanding of sole proprietorship click here.

Benefits of Sole Proprietorship

  1. Control over the business as you are the sole owner
  2. Tax filing is easy
  3. Tax rates are low
  4. you can use any business losses to offset personal income from other sources

2.General Partnership

A general partnership is an agreement between two or more partners where each partner is liable for the liabilities of the company. Omani citizens are allowed to be partners in a general partnership and thus this form of entity is not suitable for foreign investors. There is no minimum capital requirement.

Benefits of General Partnership

  1. With a pass-through tax treatment, tax filing is relatively easy.
  2. Is simple and very flexible.

3.Limited Partnership

A limited partnership is a modified general partnership. The general partner, who is required to be an Omani national, is liable for the debts and obligations of the partnership without any limitations whereas the limited partner only has limited liability, and is only liable for the company’s debts in the amount of his capital contribution.

Benefits of a Limited Partnership

  1. It is easier to market interests of a limited partner as an investment.
  2. Provisions are present that protect a partner's interest in a limited partnership from being taken away when that partner is sued personally.
  3. Like General Partnership, it also enjoys the advantages of pass-through tax treatment.
  4. It allows the general partners to use their expertise to make important decisions in managing the business.

4.Joint Venture Company

Two or more persons establishing legal relationships among themselves without affecting third parties. The joint venture cannot have a name of its own. There is no minimum capital requirement.              

Benefits of Joint Venture Company

  1. Grants access to new markets and distribution networks.
  2. Results in increased capacity.
  3. There is a sharing of risks and costs with a partner.
  4. Leads to access to greater resources, including specialized staff, technology, and finance.

5.Joint Stock Company

A joint stock company is a commercial company whose capital is distributed into shares of equal value and are negotiable as approved by law. It is governed by CCL and can be further divided into:

Public Joint Stock Company

The capital of this is divided as stocks and the shares can be publically traded. The minimum share capital requirement is OR 150,000 (about 390,000 USD).

Closed Joint Stock Company

The shares of this cannot be traded publically and the minimum share capital of OR 50,000 is needed. It also requires at least 3 shareholders of which one should be a citizen of Oman holding a minimum of 30% of total shares.

                For more details on Joint Stock Company, click here.

Benefits of Joint Stock Company

  1. Enjoys large capital.
  2. There can be easy transferability of shares.
  3. It has the ability to bear the risk.

6.Limited Liability Company (LLC)

LLCs are popular and often the most suitable method of establishing a business in Oman by foreign investors. The number of partners in an LLC company must be at least to but should not exceed 40. A foreign partner is allowed to own a maximum of 70% of the capital of the company. The minimum capital required to start an LLC company in Oman is OR 20,000 (for Omanis or GCC partners) and OR 150,000 (for mixed shareholding).

Benefits of LLC

  1. A foreign shareholder can have up to 70% of the shares in the company
  2. LLPs have the flexibility of choosing either a centralized management structure or a completely decentralized structure.
  3. The partners in an LLP have limited liability and do not lose the limited liability if they also actively participate in management.

7.Holding Company

A holding company is a JSC or an LLC, which controls one or more companies, by owning a minimum of 51% of shares of such company or companies, whether they are JSC or LLC. Holding companies are not so popular among the investors because of their structure and the high capital requirement (OR 2,000,000)

Benefits of a Holding Company

  1. The holding company usually has lower tax rates.

8.Branch Office

A branch office is an extension of a foreign company which has entered into a contract with the government or one of the entities of the government and is entitled to register and operate a foreign branch in Oman. It is a popular way for foreign companies to benefit from 100% foreign ownership. For more information on this topic, click here.

Benefits of Branch Office

  1. Provides 100% foreign ownership
  2. Minimum of 12% tax is applicable

9.Representative Office

A representative office is started for only research or promotion purposes. No commercial or business related activities can be conducted by a representative office. To learn more about Representative Office click here.           

Benefits of Representative Office

  1. Can be 100% foreign owned.
  2. Requires neither share capital nor a local partner.
  3. The foreign company remains liable for all of the debts and other liabilities of the branch office.

These are the various types of business entities and their respective benefits which are available to an investor in Oman. Now all you have to do is to choose the best business structure which suits your needs or you could let our business setup consultants do all the work for you.

We at Business Setup Worldwide would provide all the necessary details to start your business in Oman. Our business setup experts are well-versed with all the rules and regulations and will take care of the entire Banking, Visa, Legal, and Licensing formalities, without letting you worry about the bureaucratic red tape and legal formalities. To know more about the various services we provide, do reach out to us.

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About the Author

AshishKumar@bsworlwide.com's picture

Ashish Kumar has completed his PGDM in finance and has got a newfound love for content writing. He loves to curl up in his bed with a good book and when not in front of a laptop, he can be found trying out new cuisines.