Doing business in the Sultanate of Oman - PKF …

1 Doing business in the Sultanate of Oman VISION We will be the first choice for companies in their selection of professional advisers MISSION We will provide quality service to our clients by focusing on client specific needs and providing solutions to business problems, thereby adding value through expertise whilst maintaining integrity, professionalism and independence Doing business in the Sultanate of Oman Contents i Contents Chapter 1: General Introduction Geography 1 Advantages of Investing in Oman 1 Population 1 Climate 2 Communications 2 Government and Constitution 2 Legal System 2 Judiciary System 2 Language 3 Immigration 3 Major Exports and Imports 3 Government Policy on Foreign Investment in Oman 3 Import Controls 4 business Number 4 Chapter 2.

2 Economic Environment General Economy 5 Finance 5 Industrial Development 6 Agriculture and Fisheries 6 Agriculture 7 Fisheries 7 Real Estate 7 Tourism 7 The Law of Combating Money Laundering and Terrorism Financing 7 Currency and Exchange Control 8 Salalah Port and Salalah Free Zone 8 Salalah Port 8 Salalah Free Zone 9 Knowledge Oasis Muscat 9 Free Trade Agreement with United States of America 10 Securities Market 10 Export Credit Guarantee Agency 11 Doing business in the Sultanate of Oman Contents ii Chapter 3: Oman Commercial Laws and business Structures Oman Commercial Laws 12 Foreign Capital and Investment Law 13 business Structures 13 Sole Proprietorship 13 General Partnership 13 Limited Partnership 14 Limited Liability Company 14 Joint Stock Company 14 Closely Held Joint Stock Company (SAOC) 14 General Joint Stock Company (SAOG) 14 Joint Venture 15 Branch Office of a Foreign Company 15 Holding Company 15 Representative Office of a Foreign Company 16 Commercial Agent 16 Chapter 4: Registration Requirements 17 Chapter 5.

3 Labour Laws Regulatory Body 18 Working Hours 18 Overtime 18 Minimum Wages 18 End of Service Benefits for Expatriate Staff 18 Leave Salary 18 Social Security for Omani staff 19 Vocational Training Levy 19 Omanisation 19 Chapter 6: Corporate Taxation Income Tax Liability 20 Taxable Entities 20 Tax Registration 21 Provisional Return of Income 21 Annual Return of Income and Audited Accounts 21 Accounting Records 22 Accounting Period 22 Gross Income 22 Doing business in the Sultanate of Oman Contents iii Royalty 23 Determination of Taxable Income 23 Expenses Allowed to be Deducted in Determining Taxable Income of an Entity 23 Expenses not Allowed as a Deductible Expense 23 Expenses Deductible only upto Specific Amounts 24 Depreciation and Amortization 25 Tax depreciation 26 Buildings and Civil Works 26 Plant & Machinery.

4 Furniture / Fixtures and Other Assets 26 Corporate Tax Rates 27 Petroleum Companies 27 Withholding Tax 27 Categories of Tax Exempt Income 28 Categories of Tax Exempt Activities 28 Shipping Activities 28 Investment Funds 28 Priority Sector Activities 28 Carry Forward of Losses 29 Dividends 29 Capital Gains / Losses on Sale of Shares / Securities 29 Related Party Transactions 30 Avoidance of Double Taxation 30 List of countries with whom Oman has entered into Avoidance of Double Tax Treaties (ADTT) 30 Tax Assessments and Objections 31 Custom Duties 31 Other Taxes 32 Chapter 7: Financial Reporting and Auditing Books of Account 33 Method of Accounting 33 Period of Maintenance of Accounting Records 33 Accounting and Auditing 33 Chapter 8: Grants and Incentives The Law for the Organization and Encouragement of Industry 35 Tax Holiday Incentives 35 Doing business in the Sultanate of Oman Contents iv Chapter 9: Protection of Intellectual and Industrial Property Copy rights 36 Trade mark, trade names and Patents 36 Chapter 10: About PKF 37 Chapter 11.

5 Annexure Useful Contact Numbers 38 Doing business in the Sultanate of Oman General Introduction 1 General Introduction Geography Oman is the second largest country after Saudi Arabia in the Arabian Peninsula. It stretches over 309,500 square kms, encompasses a diverse range of topography, including mountain ranges, arid deserts and fertile plains. It shares borders with the Republic of Yemen to the southwest, the Kingdom of Saudi Arabia to the west and the United Arab Emirates to the north. Advantages of investing in Oman Oman offers following advantages to the foreign investors to invest in Oman. Political stability. Liberal foreign ownership in companies permitted.

6 Oman is rich in oil and gas. Capital and profits of a business entity is fully repatriable. No personal income-tax. All individuals can fully repatriate their savings. Committed to privatization, industrialization, economic diversification and development. Free trade and open market policy. Low income tax rate structure for companies and double taxation relief treaties available with many countries. Income tax holiday period of five years renewable for further period of five years, available for business entities engaged in priority areas of economic development. Geographically ideally located, proximity to Gulf, Asian and African markets. Well regulated stock exchange.

7 Industries fulfilling certain conditions can get interest free/ soft loans, exemption from custom duty on import of plant, equipment and raw materials and export credit insurance. Government leased land available at a concessional rate with good utilities. Modern infrastructure with good roads, airports, sea ports, and state of the art telecommunications and other services. English is used widely in day to day business commerce. Population The population of Oman is about million out of which expatriates are about 900,000. Doing business in the Sultanate of Oman General Introduction 2 Climate The country s climate, like its topography is diverse, with humid coastal areas and a hot, dry desert interior.

8 Although rainfall is generally light and irregular, Dhofar province in the south catches the Indian Ocean monsoon that falls between June and September. In the interior, summer temperatures can soar to 130 degrees F (54 degrees C). Communications Oman is linked with the rest of the world by the most modern telecommunications system. Oman has two International airports Muscat International Airport at Muscat and Salalah Airport at Salalah. There are several small airstrips located through out the country. Oman also has an impressive network of roads connecting all the parts of the country and also links Oman with Oman's main sea-ports are Mina Sultan Qaboos at Muscat, Mina Raysut at Salalah and Port of Sohar at Sohar which are fully equipped to handle ships touching these ports.

9 Government and Constitution The highest executive authority is the Council of Ministers deriving its power from His Majesty the Sultan, to whom it is collectively responsible. There are specialist councils, the Majlis A'Shura the Council of the People, the Government of the Capital and ministries. Legal System The Sharia Law which is based on the Holy Quran is the general law of the land. To regulate and control its economic affairs, Oman has developed a comprehensive framework of laws and regulations. The Basic Law provides for equality to all its residents and is established on the principles of a free economy and the sanctity of private properties. Judiciary System The Basic Law ensures the independence of the judiciary and the role of judges in up-holding the law of the country.

10 Commercial disputes are dealt and settled by Commercial Courts. Criminal matters / disputes are dealt and settled by Magistrate Court. Disputes between employers and employees in the private sector is primarily dealt by the Labour department of the Ministry of Social Affairs and Labour and Vocational Training, Doing business in the Sultanate of Oman General Introduction 3 and unresolved disputes are referred to the Commercial Court. Tax disputes are dealt and settled by the Commercial Courts. Language The official language is Arabic and all communication with government is generally required to be made in Arabic.