India: Setting Up Business In Oman - An Overview

Last Updated: 8 November 2002
Article by Keshav Jetsey


The Commercial code of Oman provides that foreign nationals can engage in commerce in the Sultanate of Oman only after obtaining "permission to do so in accordance with the applicable laws". Article 24 of the code provides that foreign companies may not establish a branch in the sultanate or engage in commerce except through an Omani local agent who is a merchant and in accordance with the rules set forth by the law.

The Regulation of Foreign Capital Investment, in particular, provides that: -

1. Foreign nationals may not conduct any business activities or participate in an Omani company without obtaining a license to that effect from the Ministry of Commerce and Industry.

2. License to conduct business in Oman are granted to Omani entities whose share Capital is not less than OR 1,50,000 and in which the foreign participate is not more than 49%.

3. Foreign investors are permitted to own up to 100% of an entity provided it is engaged in a national economic development project. The project has to be approved by the National Development Council, and has to have a minimum capital investment of Omani Riyal (OR) 5,00,000.


The following are the modes of setting up an entity and commencing business in Oman as applicable for foreign nationals and/or entities. Depending on the type of activity, its volume, future development and length of stay, the status may be decided.

I. Equity Participation in Local Commercial company.

II. Formation of joint venture with a local partner

III. Appointment of a local Commercial agent.

IV.Contracting with the Public Sector.


The Commercial Companies Code provides that commercial companies with non-Omani partners must comply with the Foreign Capital Investment law.

The following types of commercial companies are open for foreign participation under the Commercial Companies Code.

A. Limited Liability Companies "LLC"

An LLC must have an atleast two partners. The share capital of an LLC with foreign participation may not be less than OR 1,50,000. The capital is divided into equal parts and is not available for public subscription. The partners’ liability is limited to their share of the capital. An LIC may not engage in banking, financial guarantees, or commercial aviation activities. LLC’s are popular as they are easy to incorporate.

B. Joint Stock Companies

There are two types of joint stock companies permitted in Oman.

  1. Closed joint stock companies whose shares are not publicly traded.
  2. Public Joint stock companies whose shares are not publicly traded.

For either type of Companies, the minimum capital is set at OR 1,50,000 if there In foreign participation, Joint Stock companies may not be incorporated without the prior approval of the Ministry of Commerce and Industry and issuance of a license to that effect.


The Commercial Companies Code regulates Joint Ventures. Joint Ventures are not considered Juristic persons under the law. Joint Ventures agreements are private arrangements, and thus, do not require public recording. An Omani partner must hold at least 51% ownership of the Joint venture project.

If the joint venture conducts business with third parties as a joint venture, the transactions will be subject to the provisions of Al – Tadamon Company and the provisions of the general partner in a Tadamon Company.


Commercial agencies are basically for importing products and/or services into the sultanate and not to establish business presence. Commercial agencies are governed by the Commercial Register law.

The Commercial Agencies Law defines a commercial agency as "Any agreement through which a merchant or a commercial company in the Sultanate is assigned to promote or distribute the products or services of a foreign person or entity in consideration for profit or commission ".

Only Omani nationals (or a naturalized person who has been a citizen at least three years) who is eighteen years age or older and who is registered as a member of the Oman Chamber of Commerce, or companies duly established in accordance with the laws of Oman and with at least 51% Omani ownership may be appointed as commercial agents.

The commercial agency agreement must be in writing and must be duly certified and authenticated. The agency agreement must include at least the following essential elements.

  • The names of the agent and principle and their nationality:
  • The products or services and subject matter of the agency:
  • The term and the territory.

The agreement must be directly between the providers of the services or the manufacturer of the products and the agent. During the term of the agency, the principal shall not engage in the sale of the products and services in territory, whether directly or through any other intermediary. The agent will be entitled to his/her commission/share of profit for any such sale.

An agency agreement must be registered at the Commercial agencies register at the Ministry of Commerce and Industry to be enforceable.

Omani law provides substantial protection to commercial agents, especially in the context of the termination. If the principle terminates an unlimited term commercial agency without cause, the principal must compensate the agent. With respect to limited term agencies, the principal is free to cancel registration at the end of the term. However, an agent may seek compensation where the principal has abused this right to terminate.

1. Contracts Agency: The principal compensates the agent for promoting the principle’s services/products in the territory. The agent remains independent and may or may not have the authority to sign on behalf of the principal.

2. Commission Agents: This type of agency is usually used when the principal is concealed and the agent contracts in his/her name but for the benefit of principal .

3. Trade Representatives: This type of employment contract whereby the principal sends representatives to Oman.

4. Brokers: This is an agency agreement whereby the principal entrusts the agent to locate and identify possible buyers in consideration for a commission.


The Public Tenders Law governs government procurements in Sultanate. All government procurement and public works contracts are to be governed by the Tenders Law and shall be conducted via a public tender with the exceptions of :-

1. Defence Contracts and projects (which the Ministry of Defence overseas)

2. Specific exceptions provided for the law: the law provides that, upon meeting certain criteria, Ministries may form their own internal tenders, committees, contract directly with the supplier, or sole source.

The Tenders Committee is responsible for overseeing all government tenders. Persons who reside in the Sultanate and have an address to which a valid notice may be served are permitted to submit bids. Furthermore, the bidder must have a local agent or a sponsor who must be named in the bid. Tenders may also be submitted through local agents who must present a proper power of attorney duly authenticated from the bidder’s country.


There are no personal income taxes in Oman. Corporate income tax in Oman is regulated by the Corporate Income Tax Law. The law also applies To Omani joint ventures and any entity that has a "permanent presence" in Oman and is supported by a foreign entity. The Tax Law defines the words "Entity with Permanent Presence". An entity that has a fixed place of activity in which the project conducts all or part of its business" and it includes in particular :

  • A place for selling;
  • A place for management.
  • A branch;
  • An office;
  • A mine, quarry, or ant other place for natural resources.
  • A construction site or place or an assembly plant.

The applicable tax rates vary depending on whether or not the company is wholly owned by Omani participation in the company’s share capital if it is "a mixed company" (i.e. includes Omani and foreign shareholders) and the activity in which the company is engaged. In all cases, the applicable rates apply to slices of income on a progressive scale.

A. Tax Rates

  • Purely Omani entities and mixed public Joint Stock Entities are taxed:

between 0%-7.5%

  • Other Mixed Corporate entities
  • Omani participation (i.e. 1-90% foreign ownership):

taxes range from 0% to 25%

  • 9% or less Omani participation (i.e. 91% or more foreign ownership)

taxes range from 0% to 50%

B. Exemptions and Tax Holidays:

Corporations whose main object is manufacturing agriculture, fishery, tourism, Exportation of local products, public utility projects and infrastructure projects, as well as companies whose activities are deemed essential for economic development , may be exempt from tax for five years. These corporations may carry forward losses incurred during the five year exemption period foras many years needed until the losses are set off against taxable income.

C. Withholding Tax:

Foreign companies without a permanent presence in Oman and who receive Fees/ income from management contracts, royalties, lease of equipment and machinery, technical expertise and / or research and development, will be subject to a withholding tax amounting to 10% of the total fees/ income received.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions