Oman Foreign Capital Investment Law

Without prejudice to the provisions of the Royal Decree No.57193, non-Omanis -whether natural or juridical
persons- shall not conduct any commercial, industrial or tourism businesses or otherwise participate in an Omani
company except with a license from the Ministry of Commerce & Industry to be issued in accordance with the
Provisions of this Law.
Article 2
The license referred to in the preceding Article shall be granted after the following conditions have been met:
The business shall be conducted by an Omani company with a capital of not less than RO 150,000 and the foreign
share therein shall not exceed 49 percent of the total capital.
However, the above percentage may be increased up to 65 percent of the company's capital by a decision from the
Ministry of Commerce & Industry following a recommendation from the Foreign Capital Investment Committee.
The percentage referred to in the above paragraph may be further increased up to 100 percent of the company's
capital for the projects which contribute to the development of the national economy upon the approval of the
Council of Ministers following a recommendation from the Minister of Commerce & Industry, provided that the
project's capital shall not be less than RO 500,000.
When an existing joint company participates in a new joint venture company, the foreign share shall be considered
as the total share in each company provided that the Omani percentage shall not be less than the percentage to be
owned by Omanis as set out in the foregoing paragraph.
Article 3
Exemptions from the conditions specified in the above Article for obtaining the license shall be granted to the
following:
1. Companies which conduct business in the Sultanate of Oman by virtue of special contracts or agreements
by virtue of a Royal Decree.
2. Parties conducting a business which is declared by the Cabinet as necessary for the country.
Article 4
The application for foreign investment license shall be referred to a committee to be formed at the Ministry and
called the Foreign Capital Investment Committee. Such Committee shall be set up by virtue of a decision from the
Minister of Commerce & Industry.
Article 5
The said committee shall be responsible for giving opinions on the investment applications with a foreign share of
more than 49 percent and shall make recommendations in respect of the following:
1. The identification of the investment fields.
2. The extent to which the project can be considered as one of the economic development projects.
3. To prioritize the project submitted for licensing so that preference shall be given to the project using local
products and raw materials that help maximize the value added thereof, to the export-oriented industries,
and to the industries introducing new products or using modern technology. Preference shall also be given
to the projects that attract and localize internationally-reputed industries. In the field of tourism,
preference shall be given to projects involving the construction of integrated tourist villages and zones.
4. To look into the complaints and conflicts arising from the application of this Law.
5. Other matters related to investment referred to it by the Minister of Commerce & Industry.
The Committee shall issue its recommendations thereof by absolute majority of members and submit them to the
Minister for decision. The applicant shall be notified of the decision within a period not exceeding two weeks.
Article 6
Any applicant whose application has been rejected shall have right to appeal to the Minister within 30 days from
the date of his notification of the rejection. The decision of the Minister in this respect shall be final.
Article 7
Licensing shall be granted to the projects subject to this Law without the need for obtaining prior approvals from
any authorities outside the Ministry. However, due regard shall be given to the negative lists issued by such
authorities before granting license to any company. The concerned ministry may review the environment, health,
safety and other standards during the construction and operation stages.
Article 8
The foreign investment projects referred to in this Law may be exempted from the income tax for a period of five
years effective from the date of establishment. Such exemption may be renewed for one more period. The said
projects may also be exempted from customs duties on their imports of the machinery and equipment required for
the establishment thereof, and may be exempted from customs duties on the raw materials required for production
which are not available in the local market for a period of no more than five years commencing from the production
date. This exemption may be renewed once.
In all cases, the exemption shall be issued and renewed by a decision from the Deputy Prime Minister for Financial
& Economic Affairs upon a request from the Minister of Commerce & Industry.
Article 9
The exemption mentioned in the preceding Article shall also be applicable to the new extensions in the projects as
of the first date of the fiscal year following the commencement of production or following the operation of the
extension as the case may be.
The extension means the increase in capital which is utilized for adding new fixed capital assets which achieve
increasing the production capacity of the project which is aimed at producing or providing new activities or
services.
The land needed for investment project may be allocated by usufruct or through rent for a long period.
The investors in the investment projects shall to conduct the licensed economic activity transfer abroad the
imported capital along profits accrued from the project.
Article 10
The land needed for investment project may be allocated by usufruct or through rent for a long period.
Article 11
The investors in the investment projects shall be free to conduct the licensed economic activity and to transfer
abroad the imported capital along with the profits accrued from the project.
Article 12
The said projects may not be confiscated or expropriated unless for the public interest and against equitable
compensation.
Article 13
The said projects shall, by themselves or through a third party, import their requirements of whatsoever production
materials, machinery, spare parts and transportation means relevant to the nature of activities as may be needed
for the establishment, extension or operation thereof without being required to be registered in the importers
register. The Directorate General of Industry shall identify the projects requirements of the materials mentioned
upon request from such projects.
Article 14
It may be agreed to refer any dispute between the foreign investment projects and third parties to a local or
international arbitration tribunal.
Article 15
The provisions of the Commercial Companies Law shall be applicable to the above said joint-companies unless
otherwise specifically stated in this Law.
Article 16
The company violating any provision of this Law shall be notified to rectify such violation within a period not
exceeding one month from the notification date. The Minister may thereafter, upon a recommendation from the
Foreign Capital Investment Committee withdraw the license of the violating company.
Article 17
Without prejudice to any penalty stated in other laws, any foreigner conducting any business referred to in this Law
without license shall be fined no less than RO 5,000 and no more than RO 10,000. Likewise, any Omani
participating with a foreigner in such business without obtaining the required license shall be fined no less than RO
1,000 and no more than RO 5,000.
Investment and Trade Issues
Foreign Investment Requirements
The Foreign Capital Investment Law of 1994 provides the legal framework within which foreigners may invest and
carry on business in the Sultanate of Oman. The following address procedural requirements and investment
vehicles of which prospective investors should be aware.
Licensing Requirements
Foreigners cannot conduct any commercial, industrial or tourist business or otherwise participate in an Omani
company unless a license is obtained from the Ministry of Commerce and Industry. A license is granted upon the
fulfillment of the following conditions:
The business must be conducted by an Omani company with a capital of at least RO 150,000;
The foreign share therein must not exceed 49 percent of the company's total capital, unless authorization
to increase participation up to 65 percent is given by the Minister of Commerce and Industry. In instances
where the project contributes to the development of the economy, the project's capital exceeds RO 500,00
and an approval is given by Development Council, foreign participation may be increased up to 100
percent.
Exemptions from the above requirements may be granted under the following circumstances:
The company conducts a business under a special contract with the government or a contract established
pursuant to a Royal Decree;
The company conducts a business which is declared by the Cabinet as necessary for the country.
The following information and certified documents must accompany a license application:
The objects of the proposed business;
Articles of association or constitutive agreement;
Details of each proposed shareholder or partner;
The aggregate interest in the capital to be owned by foreigners;
A certificate from the Commercial Registrar Secretariat of the Ministry of Commerce and Industry that no
other company is engaged in Oman under the proposed name;
Power of attorney to at least one individual;
Financial reports;
The foreigner's major activities and projects;
Approvals from other government departments where relevant;
Operation through a Branch of a foreign Company or through a Commercial Agency.
It is possible for foreigners to carry on business in Oman without direct Omani participation in ownership and
management. For example, foreigners may set up a branch office to perform specific contract awarded by the
government or by an oil company holding a concession granted by the government. Registration of such a contract
with the Ministry of Commerce and Industry and the appointment of an Omani agent allows lawful performance of
the contract, including ancillary activities, without the need to set up a company of the types described above. In
addition, certain professional consultants, in areas where there is a critical shortage, are allowed to set up a branch
office in Oman subject to the satisfaction of certain requirements.
Investment Incentives
Investment incentives granted by the Ministry of Commerce and Industry are provided pursuant to Royal Decrees
and the Foreign Capital Investment Law of 1994:
Government Loans
Under Royal Decree 40/87, foreign investors may be eligible for interest-free soft loans from the Ministry of
Commerce and Industry, provided that not more than 25 percent of the equity in the company is owned by non-
Omani persons. Such attractive loans are given for the following purposes:
Acquisition of fixed assets for new projects;
Acquisition of machinery and equipment for expansion of existing projects;
Infusion of finance into a 'failing' industry, provided that the entity has been in existence for at least one
year, losses have not been caused by mismanagement and that it can be established that the loan would
convert the entity into a viable enterprise.
The granting of such loans is linked to priority areas as determined by the Ministry of Commerce and Industry.
There are two priority areas which are encouraged in the Sultanate. The first concerns the following industrial
projects or entities:
Export-oriented projects;
Food processing industries;
Projects using at least 20 percent local raw materials;
Projects employing at least 35 percent Omani employees;
Joint stock companies with at least 40 percent of public subscription.
The second priority area concerns the following tourism projects or entities:
Projects outside the capital area assisting in regional development;
Projects involving a new tourism activity;
Projects with at least 30 percent Omani work force;
Projects with foreign investment that will transfer management techniques to Oman;
Projects that promote traditional industry or that market their products;
Joint stock companies with at least 40 percent of public subscription.
The amounts of the loans are determined in accordance with the following guidelines:
Up to 100 percent of the paid-up capital for projects in the capital area;
Up to 125 percent of the paid-up capital for projects in other areas;
Joint stock companies may be granted a loan not exceeding RO 3 million;
Non- joint stock companies may be granted a loan not exceeding RO 250,000;
Tourism projects may be granted a loan not exceeding RO 500,000.
Loans given for new and expansion projects can be repaid over fifteen years, with the first installment paid after a
grace period of five years. For tourism projects and 'failing' industries, the repayment period is thirteen years, with
a grace period of three years. Delayed installments may attract an annual 10 percent interest charge, calculated
for the period of delay. As to securities, all fixed assets of the project are mortgaged under a first priority charge to
the government for the term of the loan.
Other Incentives and Provisions
Tax-related incentives and government loans are the major incentives given to foreign investors. Additional
incentives and provisions are provided under Royal Decrees and the Foreign Capital Investment Law.
Foreign investors are specifically allowed to resolve disputes with third parties by way of local or international
arbitration. The importation of any production materials, machinery, parts, and the like does not require to
registration in the Importers Registrar. Foreign investors are free to conduct the licensed activity and to transfer
abroad the imported capital along with the profits accrued in the project. Their projects may not be confiscated or
expropriated unless for the public interest and against equitable compensation. Foreign businesses may be entitled
to preferential allocation of government land. They may be given a free survey of industrial investment
opportunities, a reduction in charges for electricity, and priority in government purchases.
Investment from Gulf Co-Operation Council States
Oman is a member of the Gulf Co-Operation Council States (GCC), which also includes Saudi Arabia, United Arab
Emirates, Bahrain, Qatar and Kuwait. Under the United Economic Agreement of the GCC states of 1981 and the
resolution of the Supreme Council of GCC states, Oman permits GCC nationals to conduct certain economic
activities in specified fields in the Sultanate upon the same terms and conditions as applicable to Omanis. The fields
are determined periodically by Ministries of Commerce and Industry and of Finance and Economy. Activities
currently permitted include industry, agriculture, animal resources, fisheries, construction, management of hotels
and restaurants, retail and wholesale trade, law, medicine, accountancy, engineering, pharmaceutical, craft and
computer programming.
Incentives for Investing in Oman
1. Tax exemptions for 5 years (sometimes renewable for a further 5 years) for industrial enterprises which
contribute to Oman's economy.
2. Foreign investors are able to hold 49% of equity, which may be increased in mitigating circumstances.
3. Concessional financing may be arranged through the Ministry of Commerce and Industry and Oman
Development Bank.
4. A clear and efficient legal network which offers advice on company law, copyright law, arbitration and
agency law.
5. The lingua franca is English.
6. A diverse economy which encourages privatization of infrastructure and services
7. Price stability, with an inflation rate of not more than 1% since 1992.
8. Stable currency with full convertibility.
9. No personal income tax and no foreign exchanges controls.
10. Tax and import duty exemptions.
11. Interest free long-term loans to partly foreign owned industrial and tourism projects.
Foreign companies are formed thus:
As an incorporation of a local company or other commercial entity
As a branch office
As a consultancy
By appointing a commercial agent, ensuring that the company only supplies services and/or goods to be
imported into the Sultanate.
Airline and shipping offices, as well as companies with occasional business are not governed by the Foreign
Business and Investment Law.
Potential businesses should apply for authorization to the Foreign Capital Investment Committee at the Ministry of
Commerce and Industry supplying the company's articles of incorporation and other pertinent information. The
Ministry may impose certain conditions on the company's activities or request a bank guarantee. Capital may be
imported and exported without restriction.
It is illegal to operate in Oman without the appropriate authorization and heavy penalties are imposed on those not
meeting the legal requirements.
Ownership of Companies in Oman
Without a local Omani sponsor, it is highly difficult for companies to operate in Oman. With only a handful of
exceptions, the Foreign Business and Investment Law states that all commercial companies must have one Omani
national member, and at least 35% of the profits and the capital must be owned by Omani nationals. In public
transport, real estate and utilities services, the minimum ownership by Omani nationals is 51%; in a public
information service, the minimum is 33%.
Since 1982, foreign investment is prohibited in commercial companies offering trading or services. Agricultural,
fishing and construction projects can have 25% foreign investment or 49% if the project is deemed to be necessary
to economic development.
The Ministry of Commerce and Industry stipulates that a company with foreign investment must have the minimum
capital of RO150,000, although this may be reduced to RO30,000 with approval.
Companies that are exempt from the above regulations are:
Those operating solely on a Governmental or public institution contract.
Those carrying out enterprises deemed by the Ministry of Commerce and Industry as economic
development projects.
Licensed banks
Individuals or companies who are providing professional services, such as architects, lawyers,
accountants, engineers and consultants.
Recent press releases have suggested that participation of foreign investors could go up to 60-70%. This will be as
part of the privatization programme which aims to diversify the country's oil-dependent economy, attract foreign
investment, create a competitive environment, boost cost savings and encourage job creation.
Companies Law
The Commercial Companies Law of 1974 stipulates that foreign companies are able to participate in general
partnerships, limited partnerships, joint-stock companies and limited liability companies.
The minimum capital for a joint stock company is RO50, 000 for those companies which do not issue shares to the
general public. For those that do, the minimum capital is RO150, 000.
Any new company with capital exceeding RO500, 000 must offer a minimum of 40% of its shares to the public. The
company's founders are able to take up to 30%, with not one individual holding more than 20%.