Doing Business in Oman 2016

Doing business in Oman 2016 In association with: Contents Introduction ................................................................................................................................................................................ 3 – Country profile ................................................................................................................................................................... 4 Legal overview ........................................................................................................................................................................... 5 Conducting business in Oman ................................................................................................................................................... 9 Tax system ............................................................................................................................................................................... 12 Labour ...................................................................................................................................................................................... 15 Audit ......................................................................................................................................................................................... 18 Trade ......................................................................................................................................................................................... 19 Finance ..................................................................................................................................................................................... 21 Infrastructure ............................................................................................................................................................................ 23 This Guide has been prepared jointly by HSBC Bank Oman S.A.O.G. and Grant Thornton for the purposes of providing a high-level general overview of the business environment in Oman for the information of businesses who may be interested in transacting or investing in Oman. Any transaction or investment in Oman, however, should only be undertaken based on professional advice specific to such transaction or investment. 2 Introduction This guide to doing business in Oman will provide foreign investors with an insight into the key aspects of undertaking business and investing in Oman. Since the beginning of His Majesty In January 2016, the government • Strong government investments Sultan Qaboos Bin Said’s rule approved an austere budget with in infrastructure, healthcare and in 1970, Oman has undergone the aim of tackling the budget education wide-reaching economic and social deficit caused by low oil prices; the • No personal income taxes reforms. The government has Sultanate’s oil revenues declined • Full repatriation of capital, net actively pursued a development by more than 50 per cent in 2015. plan focused on the diversification, profit and royalties Among other measures, the cabinet industrialisation and privatisation • Strategic geographic location with approved government spending cuts, of the economy with a view to close proximity to Gulf, Asian and tax rises and fuel subsidy reforms. reducing the oil sector’s contribution African markets to GDP to nine per cent by 2020. • Free trade and open market policy Furthermore, it has more recently The Omani government actively • Low corporate income tax rate pursued a strategy of ‘Omanisation’ encourages foreign direct to help create more jobs for the investment and this will continue and double taxation treaties rising numbers of Omanis entering to be vital for sustainable economic available with many countries the workforce. growth in the country. Accordingly, the government offers a number While this guide makes reference to Oman’s economy was traditionally of investment incentives and Free some of the most common issues based on fisheries and agriculture Zones that contribute towards investors might face, it must be noted that certain industries, such before the discovery of its oil an accommodating investment as the financial services sector, reserves. While the country’s environment. oil revenues have contributed are subject to special regulation and therefore companies wishing towards its rapid economic growth, Alongside a number of government to invest in this area should seek production has been declining and incentives, Oman offers the the government has, as mentioned, legal advice. following competitive advantages pursued an active diversification for investors: policy. Nevertheless, Oman’s The information in this publication is GDP is still currently dominated by current at December 2015. • Political stability industry which comprises 64.4 per cent, while services and agriculture • Indigenous population growing at comprise 34.6 per cent and one per 3.5 per cent per annum, with over cent, respectively. half under the age of 25 3 Country profile Capital City Muscat Area 309,501 sq. km Population 3.5 million (approx.) Language Arabic (English widely used for business purposes) Currency Omani rial (OMR) International dialling code 1+968 National Holidays 2016 1 January – New Year’s Day 5 May – Lailat Al Miraj 6 July – Eid Al Fitr 23 July – Renaissance Day 12 September – Eid Al Adha 2 October – Al Hijra 18 November – (Oman National Day) 12 December – Mawlid al Nabawi Business and Banking hours Private Sector: 08:00 to 19:00 Public Sector: 07:30 to 14:30 Banks: 08:00 to 14:00pm (Sunday – Thursday) Stock exchanges The Muscat Securities Market Political structure Monarchy Doing Business rank 2016 70 Ease of Doing Business Topics 2016 rank 2015 rank Change in rank Starting a business 149 121 -28 Licenses and Permits 46 40 -6 Getting Electricity 60 124 64 Registering property 33 32 -1 Financing 126 118 -8 Protecting Investors 134 133 -1 Paying Taxes 10 10 No change Trading Across Borders 69 76 7 Enforcing Contracts 70 70 No change Resolving Insolvency 105 108 3 Source: World Bank Group (Doing Business) 4 Legal overview Political and legal system The political system of Oman is a monarchy whereby His Majesty Sultan Qaboos Bin Said Al Said holds the role of Head of State, Prime Minister and Commander In Chief of the armed forces. The Sultan appoints a Cabinet of Ministers which serves the Government and holds executive authority; nevertheless, the Sultan is responsible for authorising all laws and decrees. Oman has a bicameral legislature comprising two chambers, the Council of State and the Consultative Council. The Council of State comprises 84 members who are appointed by the Sultan for a four year term. They are responsible for assisting the Government to implement the overall development strategy and shall contribute to deepening the roots of the Omani society, maintaining the country’s achievements and ascertaining the principles of the basic law of the state. The Consultative Council comprises 84 publicly elected members who are responsible for reviewing drafts of economic and social legislation. Oman’s legal system follows the Basic Law of the State which was promulgated in 1996 and operates as a constitution for the country. However, the general law of the land is Sharia Law and Oman has also developed and enacted a comprehensive framework of laws and regulations regarding its economic affairs. The Sultan sector specific laws such as the Banking Law, circulars of issues legislation by way of Royal Decree and Ministerial the Central Bank of Oman and the Insurance Regulations Decisions are issued to clarify implementation details. as issued by the Capital Market Authority. Under the Basic Law, the judiciary is deemed independent The Electronic Transactions Law provides certain and its primary role is to uphold the rule of law and safeguards and sanctions against the illegal use of private guarantee the rights and freedoms of Omani citizens data. The Cyber Crimes Law covers violations of safety, in accordance with the relevant regulations. The court confidentiality of data and systems. Some of the penalties system is in three tiers: Courts of First Instance, Appellate applicable for hacking crimes are increased if they involve Courts and the Supreme Court. Within the tiers, there are any misuse of personal data. separate circuits for Sharia cases, criminal cases, civil and commercial cases. There is also a Court of Administrative There are also a number of restrictions on people that wish Jurisdiction. to transfer data offshore from Oman. Those undertaking a transferral must ensure the data is subject to the minimum Data protection data protection requirements as set out in Oman. Oman does not have a comprehensive data protection Furthermore, the following must be considered: the nature law. Instead, the provisions for data protection can be of the data, the origin of the data, the purpose and period found across a number of different pieces of legislation: for which the data will be transferred, the countries to which the data will be transferred and its relevant laws and • The Basic Law international obligations and any securities measures that are implemented to protect the data in that country. • The Electronic Transactions Law • The Cyber Crimes Law While there is no specific oversight for the protection of personal or sensitive data, the regulatory authority for data Data protection provisions relating to the confidentiality and information

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