OMAN:UNTAPPEDINVESTMENTDESTINATIONA Guide to Establishing a SuccessfulBusiness in OMAN

ABBAS AL-HUMAID | MAZARS OMAN

CONTENTS:

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 2

INTRODUCTION

WHAT THIS GUIDE OFFERS?Making the Most of This Information

WHY INVEST IN OMAN?Untapped Potential

OMAN RISK ASSESSMENTS

OMAN AT A GLANCEKey Facts and Strengths of the Market

SETTING UP A BUSINESS IN OMANGovernment Support and Investor Friendly Legislation

GLOBAL ONLINE SUPPORTSimplifying Business Requirements for Easy Access to Services

YOUR NEXT STEPReady to Invest?

CONTACT US

3

4

5

7

8

18

25

26

28

1

2

3

4

5

6

7

8

9

Are you looking to invest in an economically, politically and so-cially stable country in the MENA region? A country with a modern business law framework, a re-spect for free markets, a prime location, with a business-friendly environment, a contract sanctity, and respect for property rights? A place with relatively low taxes, an educated and largely bilingual workforce, a modern transport infrastructure, and where it is easy to start your business? Then you are definitely do not want to miss Oman.

Oman is in an ideal location at the centre of the east-west nexus joining markets in Europe, Asia and North America. Oman has convenient access and connections to the Gulf, Africa, and the Indian subcontinent. It borders along the busy shipping lanes of the Strait of Hormuz,

INTRODUCTION

OMAN: Untapped Investment Destination 3Contents: 1 2 3 4 5 6 7 8 9

1 carrying a significant share of the world’s maritime commer-cial traffic.Oman is a uniquely positioned country balancing cultural di-versity and racial harmony. With 3.165 kms of beautiful ocean-front vistas and untouched natu-ral beauty, the landscape varies with vast mountain ranges and immense stunning coastline. As such it is fast becoming a choice destination for tourism and in-vestment opportunities.

The Omani government en-courages foreign investment with multiple incentives. With untapped potential in many industries, there are significant opportunities in manufacturing, fisheries, mining, tourism, logis-tics and other services. There are several free zones and other options that generate significant benefits for potential investors.

Making the Most of This Information

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 4

Conducting business across borders involves challenges and complex decisions. This guide is an overview for those aiming to establish an effective, successful business in Oman, maximizing the potential for all involved.

We’ve highlighted key economic, social, legal and regulatory areas to create a practical, action-fo-cused guide. This handbook aims to provide a high-level summary of the important factors which should be considered before investing in Oman.

WHAT THIS GUIDEOFFERS?

2The purpose of this handbook is to offer an outline and sum-mary of the Omani investment atmosphere. It is intended to be an initial research tool and does not contain specific advice for individual professional require-ments. For a more detailed explanation and a wide range of services, contact Mazars Oman directly at InvestInOman@mazars.om for assistance. Wel-come to Oman. We look forward to doing business with you.

OMAN: Untapped Investment Destination 5Contents: 1 2 3 4 5 6 7 8 9

WHY INVEST

IN OMAN?3

Ranked 1st in Starting a Business,by the WB among the MENA’s 20countries, and 32nd globally.

The IMF forecasts Oman to lead GCC growth in 2019 with a rate of 4.2%.

Ranked as the world’s 33rd most competitive country in the World Economic Forum’s Global Competi-tiveness Report 2013 – 2014.

Globally ranked ports, airports and roads and some of the most strategi-cally placed ports in the world.

Over 1 billion consumers onOman’s doorstep.

Signatory to WTO, GCC commonmarket, GAFTA, FTAs with US,Singapore, Iceland, Norway,

Switzerland and Lichtenstein.

Untapped Potential

BUSINESS:

70% foreign ownership in mostsectors, while 100% ownershipin some cases and specificeconomic zones.

Setting up an Omani LLC (Limited Liability Company) requires onlytwo shareholders and one directorof any nationality and domicile.

Some of the most competitively priced land and commercialproperty in the Gulf andcompetitive utility rates.

0% personal income tax rate, flat15% corporate tax, double taxation relief treaties available with many countries and absence of sales tax.

Investor friendly legislativeenvironment.

No restrictions on repatriationof capital or profits.

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 6

In comparison to most Middle East countries, Oman is home to a vibrant expatriate and foreign investor com-munity, amounting to almost half the total population of the country.

One of the world’s safest and most secure countries with one of thelowest crime rates in the world.

Oman is considered as one of the best places in the Gulf to bring up a family.

Affordable city living. Housesrental prices are well below theGulf’s regional average.

3,165 kilometers of stunningpublic shoreline.

In 2012, Monocle magazine voted Oman one of the world’s best tourist destination.

At the center of the east-west nexus joining markets in Europe, Asia and North America in additionto close proximity to Africa.

The Sultanate’s government has been making steady and ambitious investments in the country’s infra-structure, including in the manufac-turing sector, special economic zones, seaports, airports, rail, and roads, as well as in its healthcare, educational systems, telecommunications, and facilities

Leading advanced telecommunica-tion infrastructure supporting inter-connected domestic and international networks

Oman is committed to economic diversity and investment. Government focus on diversification, industrial-ization and privatization to reduce reliance on hydrocarbon revenues.

LIFESTYLE: ECONOMY:

OMAN: Untapped Investment Destination 7Contents: 1 2 3 4 5 6 7 8 9

OMAN RISK ASSESSMENTS4O/1 O/2 O/3 O/4

SOVEREIGN RISK, RATED BBB

Low overall risk for Oman’s credit wor-thiness, but lower oil prices could po-tentially reduce revenue generation. However, the government can lever-age its foreign exchange reserves and wealth funds to settle debt obligations should they rise.

CURRENCY RISK, RATED BB

Comfortable levels of foreign exchange reserves will help sustain Omani Rial’s peg to the US dollar.

BANKING RISK, RATED BB

Overall, Oman’s banking sector is at low risk.

ECONOMIC STRUCTURE RISK, RATED BBB

Although the economy remains highly dependent on hydrocarbon revenues and therefore vulnerable to changes in oil and gas prices, Oman’s growing plans to diversify its economy through its tourism and services sector keeps the country’s economic structure safe.

KEY FACTS 01 STRENGTHS OF THE MARKET 02

OMANAT A GLANCE

Key Facts and Strengthsof the Market

$ 41,675 (2017)GDP PER CAPITA

$ 27 BILLION (DEC 2016)EXPORTS

$ 23 BILLION (DEC 2016)IMPORTS

1,1% (JULY 2016)INFLATION RATE

5Ideally situated in the Middle East & North Africa, Gulf Peninsula Region, Oman has over 3000 kilo-metres of oceanfront land and a total land area of 309,500 km2. The country of Oman is a monarchy, led by His Majesty Sultan Qaboos bin Said.

The capital city of Oman is Muscat, which is in the Gulf of Oman, at the entrance to the Persian Gulf. This ancient city has been used as a crucial port for trading between the east, the west, and north Africa since the 1st century CE.

More than 72% of the country’s 4.8 million people reside in urban areas. With an average age of 29.3, the country is comprised of a highly employable young population.

The economy of Oman is diverse with a GDP of 72.64 billion US dollars in 2017 (tradingeconomics.com). Omani Riyal (OMR), the local currency, is pegged to USD at 0.385 OMR.

Stock Market: Muscat Securities Market

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 8

COUNTRY PROFILE 03 Logistics

Fisheries

Tourism

Manufacturing

Mining

Sustainable Energy

Oman is uniquely positioned as the only member of the GCC located outside of the Gulf. With a strategic location connecting all four corners of the MENA re-gion, Oman is positioned as a global logistics cen-tre with strategic infrastructure investment.

Being less hydrocarbon-rich compared to other GCC countries, Oman is diversifying the country’s economy with a long-term development strategy that emphasises privatisation and economic ex-pansion.

SOME OF THE ANTICIPATED INVESTMENT OPPOR-TUNITIES AND KEY AREAS OF GROWTH INCLUDE:

OMAN: Untapped Investment Destination 9Contents: 1 2 3 4 5 6 7 8 9

72,64 GDP

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 10

KEY FACTS 01

13 UTILITIES

STRENGTHS OF THE MARKET 02

14 MINING

COUNTRY PROFILE 03

15 INDUSTRY

GOVERNANCE & POLITICS 04

16 TOURISM

ECONOMY 05

17 HEALTH

GEOGRAPHY 06

18 EDUCATION & TRAINING

ENERGY 07

19 ICT

AGRICULTURE & FISHERIES 08

20 TRANSPORT & LOGISTICS

REAL ESTATE 09

CONSTRUCTION 10

11 BANKING & CAPITAL MARKETS

12 INSURANCE

OMAN: Untapped Investment Destination 11Contents: 1 2 3 4 5 6 7 8 9

GOVERNANCE & POLITICS 04 ECONOMY 05

GEOGRAPHY 06

The oldest independent state in the Arab world, Oman is one of the more traditional countries in the Gulf region.

The government is comprised of the head of state, His Majesty Sultan Qaboos bin Said and the legislature. Ma-jlis Oman (the Council of Oman), Oman’s bicameral leg-islature has two levels:

• Majlis al Dawla, the Council of State, • Majlis al Shura, the Consultative Council, elected to a four-year term by direct ballot

Arabic is the official language in Oman, however English is common and used in business and industry. While Is-lam is the official religion, the country is tolerant of be-lievers of all faiths; people are free in spiritual practice.

Oman is a member nation of the United Nations, the Arab League and the Gulf Cooperation Council (GCC). The Head of State, His Majesty Sultan Qaboos bin Said has implemented policies to embrace the globalization and encourage foreign investment. Ranking high in econom-ic freedom among Arab countries, Oman ranks first in peace and stability in the MENA region.

The Omani economy has the advantage of abundant oil and gas reserves. In late 2017, production began on a sizeable new gas field. The major international shipping routes between Asia and Africa offer an ideal geograph-ic location for regional logistics and manufacturing.

With a volatile oil industry, Oman is committed to contin-ued diversification especially in transportation, logistics and manufacturing. Leveraging the country’s unique ad-vantages became increasingly important during the fall in oil prices during 2014-15. Fortunately, government fi-nancial management, international borrowing and other industry lessened the detrimental effects.

Oman is the third largest country on the Arabian Pen-insula. The more than 300,000 square kms of land in-cludes 3000 km long coastline along the Arabian Gulf, the Sea of Oman and the Arabian Sea.

Oman boasts many geographic advantages:

Crucial junction of between three major continents, Africa, Europe and Asia.

Located at the entrance to the Arabian Gulf, with ma-jor oil exports. East-West trade routes, offering easy access to mar-kets in the Middle East, India, South-East Asia, Africa and Europe.

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 12

AGRICULTURE & FISHERIES 08

REAL ESTATE 09

ENERGY 07

The government of Oman encourages investment in sustainable agriculture and the fisheries industry. As part of its vision for diversification, the Ministry of Ag-riculture and Fisheries, plans to leverage technology to construct new pathways to growth and self-sufficiency in the face of climate challenges and water scarcity.

With its advantages of a strategic location, Oman ex-pects an increase in production beyond the 2016 growth of 4.3% in agriculture and 8.7% in fisheries. Investment and development in aquaculture, dairy, livestock, pro-duce, as well as innovative products and value-added processing will also continue to increase.

With a predominantly young population, Oman’s real es-tate industry, especially in residential housing, is set to expand significantly over the next few years. The con-struction and real estate industries have encountered predominantly strong years over the past decade.

Certain domestic and global factors have slowed the real estate industry from historic highs Although mar-ket stress, especially in the energy sector, put pressure on the real estate sector, they are beginning to stabilise in anticipation for an upward trend.

Although Oman has recovered from the tumultuous drop in the oil and gas sector, that experience has driv-en efforts to develop new sources of revenue. The fall of Omani crude from $103 per barrel in 2014 to $40 in 2016 created urgency in the financial diversification in the country. In 2017, growth in the energy sector re-mained flat. Forecasts suggest 2018 will see growth of 2.8% as gas production expands. New investment and development including BP’s new Khazzan gas field, con-tinues to expand.

Prime markets in India, Africa, China and the Europe-an Union see reduced supply chain and on water inven-tories compared to other GCC ports.

Borders with the United Arab Emirates, Saudi Arabia and Yemen by land as well as the Arabian Sea and the Strait of Hormuz by water.

Oman has 61 provinces known as Wilayats and is divid-ed into 11 administrative regions (Muscat, Batinah South and North, Dakliyah, Dhahirah, Sharqiyah South and North, Wusta, Dhofar, Musandam and Buraimi). Muscat, the capital, is located in the northern part of the country. Most of the country is dry with little rainfall other than the Dhofar region, which experiences a monsoon sea-son between June and September.

Overall the climate of Oman is warm and pleasant rang-ing from 20-35 degrees Celsius from September to April. The summers are hot and temperatures can exceed 40 degrees Celsius.

OMAN: Untapped Investment Destination 13Contents: 1 2 3 4 5 6 7 8 9

CONSTRUCTION 10

BANKING & CAPITAL MARKETS 11

INSURANCE 12

UTILITIES 13

The construction sector in Oman has seen consider-able growth, relatively undeterred by lower oil pric-es. Strengthened through government commitment to diversification, the building industry grew by 10.4% in 2016. Viewed as a primary industry in the country, the investment advantages for construction are ample:

low labour costs tax-free terms and other incentives demand for custom residential for high income levels government commitment to growth in this industry

The Central Bank of Oman (CBO) regulates and oversees the banking industry and is governed by Royal Decree 114/2000 (the Banking Law). Due to preventative mea-sures and a well-regulated financial industry, the CBO avoided many of the ramifications of the global credit crisis.

Many financial services are offered by companies in the retail and wholesale banking market. Over the last two decades, varying large financing projects have been completed in Oman and, Shariah-compliant banking has been recently introduced. Cross border deals, in recent years, have declined due to tightening in world credit markets but that is changing due to investment incen-tives.

Listed and traded by the Muscat Securities Market (MSM), public joint stock companies (SAOGs) are regula-

The insurance industry in Oman is expected to continue its trend towards steep growth. Although the compulso-ry motor insurance has led the industry for many years, other sections of the industry are beginning to see sig-nificant development.

Foreign insurers with life and health coverage are see-ing growth and expanding their presence. Part of this is because of new regulations that require companies to provide health coverage for the employees. As well, confidence in the sector has increased.

Oman is embracing new technology in its utilities in-dustry. Anticipating expansion and restructuring of wa-ter and electricity sectors, sustainable and alternative opportunities are being pursued. While competition in large-scale electricity is currently not feasible, changes in policy are making distribution more cost-effective. As well, a planned introduction of regulations allowing gen-erators to sell power without long-term contracts is set to increase capacity.

In an effort to address water supply shortages, the gov-ernment of Oman has introduced new infrastructure to increase capacity throughout the five water zones. Shift-

ted by the Capital Market Authority. Foreigners are per-mitted to own up to 70% of shares in SAOGs and the MSM also offers a small number of bonds.

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 14

INDUSTRY 15

TOURISM 16MINING 14

Oman is heavily invested in reducing hydrocarbon de-pendence and providing incentives for the development of a more diversified economic base. Under the Tan-feedh programme (a programme launched to acceler-

The untouched beauty of Oman’s natural surroundings as well as rich cultural traditions and heritage make it an attractive investment destination for tourism. The country has some of the most diverse offerings in the Gulf region, balancing the historic spirit of Arabia with the arrival of modern infrastructure. An emphasis on in-novative adaptive tourism opportunities is seeing world-wide interest in investing in new sectors such as:

activity-based tourism ecotourism UNESCO World Heritage sites contemporary urban centres coastal specific tourism

With landscapes ranging from magnificent mountain ranges to wadis and more than 3000 kms of beautiful coastline, Oman is an attractive tourist destination. The nation is known for its racial harmony, safety and secu-rity unprecedented in the MENA region.

The mining industry in Oman is largely untapped, with an abundance of mineral resources opportunities exist to develop large deposits of:

copper chromite limestone gypsum marble

Oman produces large amounts of non-metallic min-erals and is the first GCC producer and exporter of ferrochrome. Government efforts to support mining investment contributes to the expected increase in ex-ploration, production, value addition and export activi-ties from both foreign and local operators for decades and beyond.

ing towards renewable energy initiatives, the country of-fers incentives and new regulations for projects to de-velop solar plants and wind farms. The regulations have even granted individuals the right to install solar panels on their personal houses to supply or supplement their electrical needs.

ate its national economic diversification), manufactur-ing is seen as one of the strongest industries to achieve growth. Although reduced commodity prices and weak-er consumer confidence delayed certain programmes, the rise in exports to Qatar and other countries will con-tinue to grow the industrial and retail sector for years to come.

OMAN: Untapped Investment Destination 15Contents: 1 2 3 4 5 6 7 8 9

HEALTH 17

EDUCATION & TRAINING 18

ICT 19

TRANSPORT & LOGISTICS 20

The UN declared Oman the most improved nation out of 135 countries in its Human Development Report 2010. For the past four decades, Oman has made health care a priority for the country and the government is looking to take that further in the long-term, Health Vision 2050. This document prepared the way for modernisation of infrastructure and hospitals across the country. Seeking partnerships with the private sector, growth and oppor-tunities are abundant from the on-site care, to adminis-tration and patient information systems.

The number of schools in Oman has increased substan-tially with rapid expansion expected to continue. In 1970 there were three schools in the country and at the end of 2016, there were 1725. The Education Council, founded in 2012 to provide consistency and regulation, the devel-opment of higher education is a priority.

The Oman Government’s focus on achieving a knowl-edge based, diverse economy is enticing outside agen-cies to open up with international interest based on the young population and numerous opportunities to bring in key educational systems.

Oman’s IT industry has seen massive increases in re-cent infrastructure, applications and applied business solutions for a wide range of customers across the country. The government has made ICT a key priority and is encouraging improvement of Omani businesses in the international arena. During 2017, the Information Technology Authority worked on developing a 2030 Dig-ital Oman Strategy (eOman) focused on developing IT skills, digital literacy and new technologies.

In the telecom industry, a third mobile network was li-censed in 2017, seeing an increase in royalty rates from January 1. Although the two existing operators, Oman-tel and Ooredoo, saw a drop-in net profits for the years, market penetration in the mobile sector is expected to be competitive.

The transportation and logistics industries in Oman are thriving and expected to expand. With 3000 kms of coastline in and friendly relations with neighbours in the north, south, east and west, Oman is well positioned to become the gateway to the GCC’s more than 50 million consumers as well as a key transportation hub for ship-ping between North Africa, Europe and Asia.

With government incentives and commitment to ex-panding the infrastructure required for these industries, investment opportunities abound. Oman’s transport and logistics sector has grown to more than $4.4 billion ac-cording to the Central Bank of Oman.

THE GLOBAL COMPETITIVENESS REPORT

ORGANIZEDCRIME

INFRASTRUCTURE

TERRORISMINCIDENCE

ROAD CONNECTIVITY INDEX

RELIABILITY OFPOLICE SERVICES

QUALITYOF ROADS

JUDICIALINDEPENDENCE

INFLATION ANNUAL

4

24

1

12

5

8

18

1

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 16

2018 OM

ANEFFICIENCY OF

LEGAL FRAMEWORK IN CHALLENGING

REGULATIONS

HIRING AND FIRING PRACTICES

EFFICIENCY OFLEGAL FRAMEWORK

IN SETTLINGDISPUTES

COOPERATION IN LABOUR-EMPLOYER

RELATIONS

FUTUREORIENTATION OF

GOVERNMENT

DIVERSITY OF WORKFORCE

INTELLECTUAL PROPERTY

PROTECTION

19

34

13

14

7

9

17

OMAN: Untapped Investment Destination 17Contents: 1 2 3 4 5 6 7 8 9

SETTING UP BUSINESSIN OMAN Government Support

and Investor Friendly

6

For the most part there are no re-strictions regarding setting up a business in Oman. The most common ways of doing business of similar to most other nations worldwide:

CORPORATE STRUCTURE

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 18

LIMITED LIABILITYCOMPANY (LLC)

LIMITED LIABILITYCOMPANY

(LLC)

CLOSED JOINTSTOCK COMPANY (SAOC)

CLOSEDJOINT STOCK

COMPANY(SAOC)

PUBLICLYHELD JOINT

STOCK COMPANY(SAOG)

PARTNERSHIP

JOINTVENTURE

JOINTVENTURE

BRANCH OF AFOREIGN COMPANY

BRANCHOF A FOREIGN

COMPANY

An LLC is often the simplest, least expensive and quickest route to establishing a business presence in Oman. For individual and cor-porate foreign investors, an LLC provides a straightforward means of managing daily operations with less oversight and regulation than joint stock companies.

Share capital required for SAOC companies is R0500,000 and for SAOG companies, it is R02 million. These requirements are signifi-cantly larger for the following companies:

banks insurance companies financing organizations lending companies

A formal joint venture agreement is a private arrangement between two companies or individuals for a specific project. In Oman a JV is not registered and has no legal status. When a JV is carried out in the country and Omani partner must own more than 50%.

Foreign companies can have representative offices in Oman with limited scope. If a project is being carried out under contract or through govern-ment agreement or organisation, the project can be declared nec-essary and a royal decree will be established permitting a company to act as a branch in Oman. Branch designation only lasts for the duration of the project. Foreign companies under the branch structure retain 100% of the business operations and assets.

OMAN: Untapped Investment Destination 19Contents: 1 2 3 4 5 6 7 8 9

Investment in new start-up companies, acquiring or expand-ing a current company, Omani regulations allow a maximum of 70% of shares to be foreign owned (with some exceptions listed below). An Oman national or Omani company must own the remaining 30%.

100% foreign ownership is permitted in the following cir-cumstances:

Oman is committed to offering positive tax incentives for corporate investment.

Companies registered in Oman are only required to pay tax on Oman-source income at a rate of 15% for all business. The tax authorities may allow a credit for foreign taxes paid on a case-by-case basis. For certain taxes paid overseas, the credit may be granted up to the amount of the Omani tax liability regardless of whether Oman has concluded a tax treaty with the source country, subject to the approval of the Director of Taxation. Certain specific tax credits, allowances and requirements exist for these unique circumstances:

All private sector employers must contribute 11.5% of an lo-cal national employee’s gross salary for social security and industrial illnesses and injuries.

Corporate Taxation:

Social Security:

Capital requirements vary based on the amount of foreign ownership. A company that is 100% Omani/GCC/US owner only requires OMR20,000, whereas a 100% foreign owned company requires OMR150,000.

Projects critical to the development of the national economy can be considered by the Council of Minis-ters on a case-by-case basis with a minimum capi-talization of OMR500,000.

Under the US-Oman free trade agreement in most sectors, companies owned by US nationals are ex-empt.

Companies owned by Gulf Cooperation Council (GCC) nationals.

Power/water desalination project companies.

Companies set up in one of Oman’s free economic zones.

Income from petroleum sales is at a rate of 55%. Taxable income may be offset by losses carried forward for up to five years. Dividends are taxable only when received from a foreign company. Capital gains are taxed the same as ordinary income, with the exemption that locally listed share sales are exempt. Foreign tax credits may apply.

FOREIGN INVESTMENTS TAXATION

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 20

100%foreign ownership

Any company, not registered in Oman that obtains income through services that are partially or wholly in Oman are subject to a I0% withholding tax on the gross amount, which is withheld by the Omani entity and remitted to the tax au-thorities.

Some of these services include:

Filing requirements differ based on specific requirements for individuals and corporations. Foreign individuals that have multiple establishments must file a tax return that cov-ers all activities and the amount of tax payable will depend on a number of considerations. Consolidated returns are not permitted; each company must file its own return.

Filing must be received within three months following the end of the accounting year with payment of the estimated tax. Within six months of the end of the accounting year, all tax owed must be paid and audited financial statements should accompany the annual income tax return.

Penalties: For corporations that fail to submit a declaration of income to the Director of Taxation penalties will be in-curred. Minimum fees of OMR 100 to a maximum of OMR 2,000 will be added to a 1% per month cost imposed on any incomplete or delayed filing.

Withholding tax:

Compliance for corporations:

management fees computer software consideration for R&D dividend on shares interest royalties and technical services fees

OMAN: Untapped Investment Destination 21Contents: 1 2 3 4 5 6 7 8 9

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 22

Omani Labour Law, issued by Royal Decree 35/2003, gov-erns most labour and employment issues. The law applies to the rights and responsibilities of employers and all private sector employees, in all industries, regardless of nationality.

Other employment law and regulation has been implement-ed by the Ministry of Manpower to address minimum wage and requiring the hiring of Omani employees (Omanisation). In some instances, the requirements vary based on industry, zoning area and other factors.

The government of Oman is committed to providing incen-tives for investment, industry and development. Tax exemp-tions in free zones, and for shipping and aviation companies, as well as reciprocal trade agreements enable Oman to of-fer competitive initiatives as an economic hub in the MENA region.

Foreign investors may benefit from interest free or low in-terest loans, corporate tax benefits, pre-built, serviced lots and other exemptions if their businesses are engaged in:

For foreign investors, businesses and companies, Oman im-plemented free zones for use as distribution and manufac-turing bases in a central trade and commerce area. The four free zones have been developed for import- and export-ori-ented companies who require an office in Oman:

Other areas in Oman, considered industrial estates, offer other similar tax advantages. Knowledge Oasis Muscat al-lows technology countries to be 100% foreign owned.

A wide range of commercial activities are permitted in the free zone, including:

Advantages of Free Zones

Commercial considerations agriculture fisheries industry mining quarrying tourism

Businesses and investors can be 100% foreign owned Reduced quota requirements for Omani employees No minimum requirements for share capital No corporate taxes for ten or more years No duties imposed on imported and exported products within the free zone Trading within Oman without a local agent, with only 5% duty applied.

importing raw materials manufacturing processing assembling and packaging exporting finished products storing or warehousing products.

AI Mazunah Sohar Salala Duqm SEZ

EMPLOYMENT

GOVERNMENT INCENTIVES

FREE ZONES

15%tax rate

OMAN: Untapped Investment Destination 23Contents: 1 2 3 4 5 6 7 8 9

Al Mazunah, established in 1999, has some unique benefits. Although the rest of Oman requires 30% of the workforce to be Omani nationals, in this free zone a company is only required to employ 10% local workforce.

As well, 100% foreign ownership with 30 years of tax free operations for industries in light crafting, commercial sales, and services is available. Located 4 kilometres from the Oman border with Yemen, Al Muzunah provides companies with the opportunity to hire Yemeni citizens without a work permit.

Open in 2005, Salalah continues to develop over 19 square kilometers adjacent to the super port hub and along major trade routes. This free zone is designed to offer licensing and opportunities for business and investment in chemical and material processing, manufacturing, assembly and dis-tribution.

Organized to benefit companies looking to import raw ma-terials, manufacture and export the finished product, Salah free zone provides multiple tax advantages:

AI Mazunah

Salalah

0% corporate tax for 30 years on profitsand dividends 0% personal income tax 0% duties and custom requirements

Licensing can be for general or specialized trading or ser-vices, or industrial applications depending on whether the company or organization intends to import, manufacture, export or distribute products.

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 24

The banks in Oman provide a wide range of financing prod-ucts, including commercial, residential and real estate in-vestment. In an effort to reduce overextension, they may not prepare loan agreements that exceed 60% of the borrower’s income per month.

Real estate owners have the right to lease their property under Royal decree 6/89, which provides regulation and standardization for commercial, residential and industrial tenancy.

Financing

Property Leases

Foreign and corporate ownership encouraged with 100% freehold property laws First degree relatives permitted joint ownership Inheritance laws are applicable to the buyer’s property Property purchases and their first-degree relatives re-ceive an Oman residential visa Multiple-entry visit visa for the property buyer during construction The first transfer of ownership requires no registration fees

industry transportation tourism fisheries logistics

Sohar Port free zone is under development and will offer 100% foreign ownership and 10 years of tax free operations. Under the Omanisation plan, if Oman nationals are hired, the business may remain tax free indefinitely. Anticipated to over 4500 hectares this port will be a centre for licensing and a one-stop shop for business setup and incorporation procedures.

Businesses will be able to find information about industrial licensing, manufacturing, logistics and general trades spe-cific to their unique requirements. With areas designated specifically for the following industries, the Sohar Port free zone provides a centre for business interaction from the ad-joining MENA regions and beyond:

Divided into eight different zones aimed at economic invest-ment, the Duqm SEZ will be beneficial to export-oriented companies. As an economic centre in the Middle East, it will total more than 1700 square km with a sea port and airport and distinct areas for business and corporations in:

Sohar

Duqm SEZ

steel manufacturing and processing trade and logistics oil and gas petrochemicals minerals and aggregates industry ceramics food logistics and food processing

Projects that fit Integrated Tourism Complexes (ITCs) criteria receive specific benefits:

FOREIGN AND CORPORATEOWNERSHIP OF PROPERTIES

OMAN: Untapped Investment Destination 25Contents: 1 2 3 4 5 6 7 8 9

The Ministry of Commerce and industry has integrated more than a dozen organizations and government systems into one lo-cation at www.business.gov.om. The advantage is one location for industries and individuals looking to do business in Oman to find: A single point entry for online government services, simplifying information for easy access for the business community.

Quick and easy to follow regis-tration and licensing.

Transparent, easy to under-stand information for business and government interaction.

The Directorate General of Cus-toms at the Royal Oman Police (ROP) provides a system to easi-ly connect to commercial, indus-trial and transportation compa-nies so as to offer a one-stop service. Bayan (www.customs.gov.om), facilitates import and export processes in Oman.

In order to speed up the applica-tion process for new visas and renewals, the Royal Oman Police (ROP), now accepts online sub-mission via their website:www.rop.gov.om.

In an effort to speed up and streamline the work permit

Simplifying Business Requirements for Easy Access to Services

INVEST EASY

BAYAN

E-VISA

E-WORK PERMITS

application process, The Ministry of Manpower provides this ser-vice online. All work permits can be accessed by businesses and employers at: www.manpower.gov.om

GLOBALONLINESUPPORT

7

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 26

Ready to Invest? How Can Mazars Serve You?

If you are you looking to invest in Oman and need support to get the right information or take ac-tion, we at Mazars Oman would be glad to serve you.

At Mazars Oman, our aim is to help you navigate the challenges and opportunities you’ll encoun-ter as you establish an Omani business. The experience, knowl-edge and integrity of the Mazars team means we can work alongside you as a strategic local partner you can trust.

Our expertise working within Oman’s business systems will reduce uncertainty and risk, while helping you to recognise and make the most of the many benefits Oman offers.

YOURNEXTSTEP

8Passive Nominee Resident Shareholder:For entities that require 30% local shareholding, Mazars will provide our clients with a profes-sional passive nominee resident shareholder service.

Company & Tax Registration, Consultation and Execution:Mazars can assist our clients in registering their business in Oman without personal travel to the Sultanate.

Consultation: We will assist you in deciding what type of Oman business entity and what class of business license you need. As well, we can help you determine whether a free zone incorpora-tion can be achieved. Further-

OMAN: Untapped Investment Destination 27Contents: 1 2 3 4 5 6 7 8 9

more, we offer you employment visa strategies.

Execution: We will manage all your company registration and legalization processes including bank account opening, Minis-try of Commerce and Industry, Municipality approval, Ministry of Manpower, ROP, Chamber of Commerce and Secretariat Gen-eral for Taxation.

Finding Office Premises: We will arrange meetings for you with the four best premises that suits your criteria.

Cultural Orientation:Coming to a new culture can be daunting. We can help you navigate the foreign waters

from knowing how to conduct business successfully in Oman, to even providing a person to translate if required.

Employee Immigration Visas:We prepare and submit a visa application that maximizes the likelihood of visa approval for our clients.

Staff Recruitment/ Head Hunt-ing:Knowing the country’s employ-ment rules and labour standards positions us as experts in assist-ing our clients with their staffing concerns.

Maintenance of the Omanisation Plan:Companies are required to hire

certain % of Omani nationals through a rule known as Oman-isation. However, finding suit-able qualified Omani employees can be a challenge to fulfil the Omanisation. We can support you in preparation and manage-ment of the Omanisation plan.

Employee Payroll:We will efficiently and timely complete monthly payroll obli-gations including: i) salary and pension calculations, ii) keeping accurate records iii) paying with-holding taxes.

Monthly Bookkeeping and Ac-counting:We manage monthly bookkeep-ing, auditing, tax planning and general accounting services.

Corporate Tax Returns:At the end of the year, Mazars can calculate your tax liability, complete the required form, and file it with the Oman Tax Authori-ty, making sure that you avail the maximum tax exemptions and benefits, as per the Oman tax laws.

If there is any assessment by the Oman Tax Authority, we can rep-resent you in their investigation and negotiations to minimize any penalties or liabilities.

Contents: 1 2 3 4 5 6 7 8 9

CONTACT USNeed specific information, or to take action, we at Mazars Oman would be glad to serve you from A to Z. Please visit us at www.mazars.om/Invest-in-Oman or contact us at InvestInOman@mazars.om and we look forward to beingof service. You also can call either of us below:

ABBAS AL-HUMAIDCPA, CFE, CMC, CFC, CMGRCARL Partner, Mazars Group BelgiumManaging partner, Mazars Oman +968 9938 5151(Tel)abbas@mazars.om

DR.JONATHAN STEARNS

MBAPartner – Consultancy +968 9675 0679 (Tel)jonathan@mazars.om

9

OMAN: Untapped Investment Destination 28

Contents: 1 2 3 4 5 6 7 8 9 OMAN: Untapped Investment Destination 29

MAZARS OMANA fully integrated member firm of Mazars

MAZARS OMAN is one of the leading audit and advisory firms in the country. It has been ap-proved since 2004 by the Capital Market Authority (CMA) to audit the entities regulated by CMA.

MAZARS OMAN is a fully inte-grated member firm of Mazars, a multinational organisation specializing in audit, accountan-cy, tax, advisory and consultan-cy services. Mazars operates throughout 100 countries and territories.

MAZARS OMAN is led by the Omani national Mr. Abbas Al-Hu-maid who is also a Partner of the international Mazars Group, registered in Belgium.

Our goal is to always go above our clients’ expectations and needs and deliver the value they deserve. Therefore, we pay due attention to education, transpar-ency and local regulations.