With an economic freedom score of 61.0 and ranked 93rd freest in the 2018 Index, Oman has a high degree of economic freedom. A strong economic environment in Oman enables it to be an ideal place for foreign investors to start a business. The business setup in Oman is simple and quick. It can be fully done online without the need of travelling down to Oman. Most industries allow for full ownership by a foreigner and thus, a nominee shareholder would not be required. This results in a lesser cost to start a business in Oman compared to other countries. Therefore, setting up a company in Oman is ideal for foreign investors. In this article, our team at Tetra Consultants has highlighted 7 advantages of setting up a company in Oman to help understand whether you should register company in Oman.
1. Strategic Location:
Oman is strategically located in close proximity to the major business centers of Asia, Europe, and North America. Due to its strategic position, its non-oil exports have reached around 176 countries. Hence, Oman’s prime location creates financial business opportunities attracting foreign investors in setting up a company in Oman.
2. Pro-Business Environment:
The government pro-business initiatives attract foreign investors to start a business in Oman. In order to create a business-friendly environment, the government has introduced various initiatives such as tax exemptions, interest-free loans, free trade zones and preference in the allocation of government land.
With a business-friendly environment in Oman, there are no restrictions on capital and profits repatriation. The corporate tax rate is rather low at 15%. In addition, there are various exemptions available for entrepreneurs. In order to support entrepreneurs setting up a company in Oman, there are exempted from corporate income tax on the first OMR 30,000. In the case of free zone registered companies, there is also an exemption from corporate tax for up to 50 years, customs duties on import of equipment and raw material for production purposes.
To facilitate free trades, Oman has trade agreements with multi countries. One example would be the 2009 Oman-USA Free Trade agreement. It allows for the same legal rights for United States investors as Oman citizens where they can fully own a business in Oman. Furthermore, they are not required to pay tariffs on Oman-US trade.
There are a total of three zones and two specific economic zones. These zones allow for tax holidays, import duty waivers, exemption on initial share capital requirements and 100% foreign ownership. Therefore, attracting foreign investors in setting up a company in Oman.
3. Tax incentives due to the pandemic:
In light of the COVID-19 pandemic, the Oman government introduced a series of tax incentives to combat the pandemic. In the economic stimulus plan that came into effect on 9th March 2021, a five-year tax exemption was proposed for businesses in certain industries namely manufacturing, agriculture, fishing, mining, tourism, and logistics and services. This aims to diversify the economy in Oman.
Apart from that, there are so tax measures such as the following:
- Exemption from tax for hotel establishments in the assessment years 2020 and 2021.
- Waiver of penalty for tax payment installment in 2021.
- Suspension of withholding tax on dividends and interest for an additional period of five years, from the tax year 2020.
- Losses for tax losses incurred for the assessment year 2020 are allowed to be brought forward without any limit.
- Reduction of the tax rate from 15% to 12% for small and medium-sized enterprises (SMEs) for the tax years 2020 and 2021.
- Tourism businesses are exempted from tourism and municipal tax levy till the end of 2021.
- A preliminary license will be available for certain types of businesses so that businesses are able to start with the temporary license before the issuance of the final license.
- Granting permit for ready hiring of three expatriates on the issuance of commercial registration.
4. Natural Resources:
Oman is blessed with natural resources such as oil. The oil export has increased and improved Oman’s economy over the years. This was primarily due to the sustained high oil prices resulting in budget surplus, trade surplus and foreign reserves in Oman.
Despite its natural resources, Oman has been constantly trying to diversify through investment in the private sector and foreign businesses. Apart from that, it is well-diversified industrially and thus it has a robust supply chain to facilitate business operations.
5. Availability of Workforce:
Oman has a population of approximately 4.3 million and of which, 1.7 million are working employees. Hence, there is an availability of workers. Furthermore, the research and development sector in Oman is rather strong.
6. Good Relations with Other Countries:
The people of Oman are known for their generosity, tolerance, and friendliness. This has attracted short-term visitors and has also encouraged businesses to set up with help from local communities. Omani culture emphasizes the building of strong bonds and relationships in both social and professional contexts. Therefore, foreigners are advised to spend time with their Omani business counterparts and make an effort to establish a good rapport with them.
The culture in Oman is welcoming as the citizens are known for their generosity, tolerance, and friendliness. This not only boosts the tourism sector but attracts foreign investors to set up with help from the local communities. With an emphasis on strong ties, business in Oman is encouraged to cultivate business-friendly relations with the neighboring countries.
7. World-class Infrastructure:
There is a strong transport network in Oman due to investments to improve its railway. Furthermore, it is known to have a world-class infrastructure with globally ranked ports, airports, roads. Hence, its world-class infrastructure and transport network attracts foreign investors due to its reputation and convenience.
After this article, you would have understood that the advantages of setting up a company in Oman. If you are unsure of the process of setting up a company in Oman, you may engage the service of Tetra Consultants. With Tetra Consultants by your side, the registration process of your business in Oman will be smooth and hassle-free. Our comprehensive service package includes planning and strategizing with our clients to select a suitable business entity, completing the registration process, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations.
Contact us to find out more about how to register company in Oman and our dedicated and experienced team will revert within the next 24 hours.