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Expanding a business to Oman from the UAE is an attractive opportunity for many entrepreneurs. Oman has a business-friendly atmosphere, a strategic location, and a stable economy. For UAE-based investors, setting up a business in Oman opens doors to a new market with fewer restrictions compared to other countries in the region. This article outlines the key steps and considerations to help you successfully start a business in Oman from the UAE.

Why Consider Oman for Your Business Expansion?

Oman is known for its pro-business environment, political stability, and tax incentives, making it an ideal destination for investors. Some benefits include:

• Tax Benefits: Oman has no personal income tax and offers various corporate tax exemptions.
• Strategic Location: Oman’s proximity to major trade routes in the Gulf and beyond makes it a valuable hub for businesses.
• Government Support: Oman’s government provides numerous incentives and support for foreign investors.
• Growing Economy: Oman’s economic diversification plan has led to growth in sectors like tourism, logistics, and manufacturing, creating ample opportunities.

Now, let’s dive into how you can set up your business in Oman from the UAE.

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Choose the Right Business Structure

Before starting a business in Oman, the first step is to select the appropriate business structure. Oman offers several types of company formations, including:

• Limited Liability Company (LLC): This is the most common business structure, suitable for small to medium-sized enterprises. It requires at least two shareholders, and foreigners can hold up to 70% ownership, with the remaining 30% held by an Omani partner.
• Branch Office: If you already have a business in the UAE, you can open a branch office in Oman. This structure allows you to maintain 100% ownership of the Omani branch.
• Free Zone Company: Oman has several free zones, such as Sohar Free Zone, Salalah Free Zone, and Al Mazunah Free Zone. Companies established in these zones benefit from tax exemptions, full foreign ownership, and ease of repatriating profits.
• Representative Office: A representative office is suitable for businesses looking to explore the Omani market without engaging in commercial activities. It is primarily used for marketing and business development purposes.

Choosing the right structure will depend on your business goals, industry, and the level of ownership you wish to maintain.

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Meet the Legal Requirements

After selecting the business structure, the next step is to ensure compliance with Oman’s legal requirements. The process of company registration in Oman involves several steps, including obtaining approvals and registering with relevant authorities. Here are the main requirements:

• Business License: You need to obtain a business license from the Omani Ministry of Commerce and Industry (MOCI). The type of license you need will depend on your business activity. Some sectors, such as tourism and construction, require additional permits from relevant authorities.
• Capital Requirements: The minimum capital requirement for an LLC in Oman is OMR 20,000 for foreign investors. For companies with full Omani ownership, the minimum capital requirement is OMR 3,000.
• Omani Partner: If you are setting up an LLC, you will need an Omani partner who holds 30% of the shares. However, some free zones allow 100% foreign ownership, which is worth considering.
• Company Name Reservation: You will need to reserve a unique company name with MOCI before proceeding with registration.
• Articles of Association: You must draft and notarize the Articles of Association, which outline the company’s structure, shareholders, and activities.

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Open a Bank Account

Once you have completed the legal registration of your business in Oman, the next step is to open a corporate bank account. This step is essential for managing your finances, paying employees, and conducting transactions.

Here’s what you will need to open a business bank account in Oman:

• Company Documents: Submit the Articles of Association, business license, and other company registration documents to the bank.
• Identification: Provide identification documents for all shareholders and signatories.
• Proof of Residency: Some banks may require proof of residency for the shareholders and directors.

Oman has several reputable banks that offer business accounts, such as Bank Muscat, National Bank of Oman, and HSBC Oman. Each bank has its own requirements and services, so it’s advisable to compare options before making a decision.

Secure Office Space

Having a physical office in Oman is a requirement for most business activities. Depending on your business structure, you can choose between free zone offices or commercial spaces in cities like Muscat. Free zones typically offer ready-to-use office spaces, while mainland businesses will need to lease commercial properties.

If you opt for a free zone company, you’ll benefit from lower overhead costs and ease of doing business. However, if your target market is within Oman, establishing your business on the mainland may be a better option.

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Hire Employees and Fulfill Labor Requirements

After setting up your office, you may need to hire employees to run your business. Oman has specific labor laws and requirements that you must adhere to, including:

• Omanization Requirements: Oman’s government encourages the employment of Omani nationals through a quota system known as Omanization. Depending on the industry, you will be required to hire a certain percentage of Omani employees.
• Work Permits and Visas: Foreign employees must have a valid work permit and visa. You will need to sponsor their visas and comply with labor laws regarding employment contracts, working hours, and benefits.

Understanding labor laws and fulfilling Omanization requirements are crucial to ensure smooth business operations.

Tax and Accounting Compliance

One of the main attractions of doing business in Oman is the favorable tax environment. However, businesses must still comply with Oman’s tax and accounting regulations. The primary taxes to be mindful of are as follows:

• Corporate Tax: Foreign-owned companies are subject to corporate tax, with a flat rate of 15%. Small businesses with profits below OMR 30,000 may benefit from lower tax rates.
• VAT: Oman introduced a 5% value-added tax (VAT) in 2021, applicable to most goods and services. It’s important to register for VAT and ensure proper invoicing and tax returns.
• Social Security Contributions: Employers are required to contribute to social security for Omani employees, which covers pensions and other benefits.

You may want to hire a tax consultant or accountant to ensure compliance with local tax laws and avoid penalties.

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Market Entry Strategy

Once your business is legally established, you will need to develop a market entry strategy to ensure success in Oman. This strategy should include:

• Market Research: Understand the local market, including your competitors, customer preferences, and regulatory environment.
• Networking: Building relationships with local businesses and government authorities can help you gain insights and grow your business. Oman Chamber of Commerce and Industry (OCCI) is a valuable resource for networking opportunities.
• Digital Marketing: Utilize digital marketing channels such as social media, search engine optimization (SEO), and email marketing to reach potential customers in Oman.
• Partnerships: Forming strategic partnerships with local companies can help you gain credibility and access resources.
  A solid marketing plan will help your business grow in Oman’s competitive landscape.

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Seek Professional Help

Starting a business in a new country can be complex, especially when dealing with unfamiliar legal and regulatory requirements. To ensure a smooth process, you may want to seek the assistance of a business setup consultant or legal advisor. Many firms in the UAE and Oman specialize in helping foreign investors navigate the process of company formation.

These consultants offer valuable services such as:

• Handling paperwork and government approvals
• Advising on the best business structure and location
• Ensuring compliance with labor and tax laws
• Assisting with bank account setup and office leasing

Professional help can save you time and ensure that your business is set up correctly from the start.

Call +968 781 98 097 for Business Setup Service in Oman

Starting a business in Oman from the UAE is a promising opportunity for investors looking to expand their operations. With a favorable business environment, strategic location, and supportive government policies, Oman offers numerous benefits for UAE-based entrepreneurs. By following the steps outlined in this guide—choosing the right business structure, meeting legal requirements, and developing a market entry strategy—you can successfully establish and grow your business in Oman.