One of the most important decisions when starting a business in Oman is choosing whether to register in the mainland or one of the free zones. They both have their unique benefits with respect to targets, operations and objectives of the company that will determine which option is best suited for you. This article is aimed at helping you differentiate between the two so as you can choose wisely between the two.
What is the Mainland in Oman?
This kind of businesses in Oman which are outside any free zone area stand for mainland. Mainland companies are free to do business with the local customers and government all over the country. When it comes to starting a business in the mainland, one usually has to provide an indigenous sponsor or service agent with not less than 30% shareholding in the company.
Mainland companies performing their activities in Oman operate in the context of more generalized regulatory frameworks but still enjoy more freedom with regard to the markets they wish to serve. They are allowed to engage in different types of business activities without very many regulations compared to the other companies.
What is a Free Zone?
A free zone is a certain area in Oman where businesses receive exemptions from tax, own the property 100%, and get business licenses without any difficulties. Normally, these zones are created to attract particular sectors like logistics or manufacturing. The aim that these areas such as Sohar Free Zone or Salalah Free Zone or Duqm Special Economic Zone have is creating an accommodating climate for business growth.
Free zone businesses are usually limited either to free zone or international operations; they cannot trade with Omani residents or government entities directly unless they have been provided with extra permissions or have made special arrangements. Nevertheless, these limits are countered by some benefits that such companies enjoy when they operate from the free zones.
Mainland vs. Free Zones: Key Differences
Ownership and Sponsorship
- Mainland: A minimum of thirty percent of the business shares must be owned by a local sponsor from Oman.
- Free Zones: Offer 100% foreign ownership is ideal for those expatriates and international investors whose preference is for full control over their business.
Business Scope
- Mainland: There is no restriction of any kind for local companies, government or any other entity based in Oman for trading purposes.
- Free Zones: Businesses are usually limited to either trade in the free zones or international trade, making them more appropriate for import/export trade and manufacturing activities.
Tax Benefits
- Mainland: Most businesses are normally subject to Oman’s corporate tax rates that can climb to upto 15%.
- Free Zones: Delight in sales tax freedom for some years, often 5 to 10 years, and other benefits like exemption from paying custom duties on goods brought in the area.
Regulations and Compliance
- Mainland: To meet the laws and regulations, the companies must comply with a wider set of Omani laws including labor regulations, commercial regulations and licensing requirements.
- Free Zones: Regulations are generally more relaxed, having a main concern with the specific industry and type of business. Usually, the process is much quicker and easier.
Costs
- Mainland: Choosing a mainland setup could imply increased setup and operating costs due to the requirement of a local sponsor and other requirements for regulation.
- Free Zones: Office space and licensing come at competitive rates in free zones, in addition to other incentives that might lower the business costs.
Which Option is Right for Your Business?
When you Register your business in Oman, you need to think about two options: mainland or free zone registration. If you want to serve the local Omani market, then it might be reasonable for you to set up a mainland company. However, if your company specializes in international trading or any particular industry such as manufacturing – then this is where a free zone setup would make more sense.
When deciding, keep in mind your market, long-term goals and financial resources in order to be able to consider each plan before dropping on any one of them; talk to a business consultant can assist you in making decisions that are necessary concerning which structure suits you best.
