Smart decisions. Lasting value. Doing Business in Oman Audit / Tax / Advisory / Risk / Forensic Welcome to ‘Doing Business in Oman’ Welcome to Crowe Oman‘s “Doing Business in Oman” 2020 guide. This guide forms part of the “Doing Business in Oman” series and provides a quick reference for those interested to invest in Oman. While it is not exhaustive, this guide aims to answer some of the key questions that may arise. When specifi c issues arise in practice, it will often be necessary to consider the relevant rules and regulations, and to obtain appropriate professional advice. This guide covers the following areas: • General Information • Population • Government and the Economy • Tax Structure • Foreign Investment Foreword Message from Davis Kallukaran Dear Friends, The Sultanate of Oman is politically the most stable country in the Arabian Peninsula. Omani culture always welcome co-operation from other countries. As a resident in Oman for the last three decades I felt that this is one of the best business friendly countries in the Middle East. The diversifi ed geography makes Oman a prominent tourist location. The state of the art infrastructure and steady industrial and economic growth have attracted many foreign businesses to this oil rich country. A member fi rm of Crowe Global, the eighth largest global accounting network, Crowe Oman serves a wide spectrum of clients in the Sultanate. The fi rm was established in Oman in 1995 and is the one stop shop for the business community in Oman. We support various public and private sector organizations, to continuously face the risks and challenges to remain market leaders. As part of our commitment to society, we are involved in training and educating young Omani talents. We are one among the ten fi rms accredited by the capital market authority of Oman (CMA) to undertake Audit and Assurance services of CMA regulated entities. This book will give you a quick view of the economic and business environment of Oman, which will help you in decision making regarding investing in Oman. Let us join together to build a promising future for the Sultanate of Oman With Best wishes, Davis Kallukaran Managing Partner Muscat, Sultanate of Oman 1st January 2020 Table of contents 5 10 18 Introduction Economic Environment Business Environment History, Geography and climate, Economic trends, GDP Growth Business and investment Local time, Population and and Economic development governing laws, US Oman FTA, language, Constitution, Government plans, Foreign direct investment, Major Government departments and administration, Council of Economic sectors, Privatisation of facilitating businesses, Types Oman, Legal system, International Government owned Establishments. of business entities, Oman relations, Infrastructure and social economic zones, Financial services. reporting and auditing requirements. 33 35 36 Finance, Banking and Labour Environment Taxation Insurance Environment Overview, Labour Laws, Overview, Taxable business entities, Employment of nationals, Tax rates, Permanent Establishment Currency and exchange control, Employment of expatriates, (“PE”), Withholding tax, Withholding Finance and banking, Non-banking Working days and hours, Social tax remittance, Taxable income, fi nancial intermediaries in Oman, Security Law, Terminal benefi ts to Deductible / Non-deductible Insurance. expatriate employees, Employment expenses, Tax exempt income, Tax taxes, Trade unions. exempt activities, Double taxation treaties, Double taxation avoidance, Related party transactions, Tax compliance and administration, Indirect taxation Value Addes Tax (VAT). www.crowe.om 4 Introduction History the East and Europe to the West. Due to its key position on lucrative trade routes, Sumerian tablets refer to a country called the Portuguese conquered Oman in 1507. Magan and Akkadian, a name which links Oman was reconquered in 1650 by Sultan Oman’s ancient copper resources. Over Bin Saif Al Yarubi, who established colonial centuries, tribes from the west settled in possessions in East Africa. Oman, making a living by fi shing, farming, herding or stock breeding, and many The present Al Busaidi dynasty was founded present day Omani families trace their by Imam Ahmed Bin Said in 1744. In the ancestral roots to other parts of Arabia. late 18th century, a series of friendship treaties between Britain and Oman formed Archaeological evidence suggests that the basis of special relationship between trading, farming and fi shing existed in Oman the two countries. In the fi rst half of the as far back as the 4th millennium BC. In the 19th century, under Sayyid Said Bin Sultan’s middle ages, Oman was a thriving centre of rule, its maritime trade grew and diplomatic commercial activity with a fl ourishing trade relations were established with several in copper and frankincense. countries. Oman was the fi rst Arab country Oman was exposed to Islam in 630, to send a diplomatic envoy to the USA in the during the lifetime of prophet Muhammad; nineteenth century. consolidation took place in the Ridda Wars After the death of Sayyid Said Bin Sultan, in 632. the settlement of a dispute between his two sons resulted in the division of the Omani In 751 Ibadi Muslims, a moderate branch empire and its isolation from its East African of the Kharijites, established an imamate territories, its decline as a trading nation in Oman. Oman is currently the only and eventually the loss of its other overseas country with a majority Ibadi population. possessions. The country came to rely on Ibadhism has a reputation for its “moderate date farming and fi shing until economic conservatism”. quantities of oil were fi rst discovered in early Between the 7th and the 15th centuries, 60’s and the fi rst exports of crude oil took Oman’s maritime trade fl ourished and place in 1967. its dominance on sea trade routes was Since 1970, when His Majesty Sultan extended to Africa and as far as China to Qaboos Bin Said assumed power, the www.crowe.om 5 country has undergone rapid and far Gulf of Oman forming Musandam’s coastal reaching economic and social development boundaries. while maintaining its rich cultural heritage Oman with its capital at Muscat, and natural environment. is administratively divided into 11 Since his accession, Sultan Qaboos Bin Governorates - Ad Dakhiliyah, Al Buraymi, Said has balanced tribal, regional, and Al Wusta, Ad Dahirah, Al Batinah South, ethnic interests in composing the national Ash Sharqiyah South, Muscat, Musandam, administration. The Council of Ministers, Al Batinah North, Ash Sharqiyah North, and which functions as a cabinet, consists of 28 Dhofar. ministers, all directly appointed. The Majlis Like the rest of the Persian Gulf, Oman Al-Shura (Consultative Council) has the generally has one of the hottest climates mandate of reviewing legislation pertaining in the world, and receives little rainfall. to economic development and social The climate generally is very hot, with services prior to its becoming law. temperatures reaching 50 degree Celsius Oman’s extensive modernization program (122 degree Farenheit) in the hot season, has opened the country to the outside world from May to September. Annual rainfall in and has preserved a long-standing political Muscat averages 100 mm (3.9 in) falling and military relationship with the United mostly in January. Dhofar region is subject Kingdom, the United States, and others. to the southwest monsoon, and rainfall up Oman’s moderate, independent foreign to 640 mm (25.2 in) has been recorded in policy has sought to maintain good relations the rainy season from late June to October. with all Middle Eastern countries. Local time Geography and climate The local time is four hours ahead of The Sultanate of Oman (referred to as Greenwich Mean Time (GMT). “Oman”) is one of the most fascinating countries in the Middle East, known for Population and language its spectacular geographical beauty and cultural diversity. Oman’s magnifi cent Oman’s population has almost doubled over coastline, towering mountains, expansive the past decade and has now fi nally passed deserts, traditional heritage, friendly people the four million mark. As of August 2019, and social environment makes it one of the total population of Oman had crossed the most popular tourist and business 4.9 million. Citizens constitute around 56 destinations in the world. The country is per cent of the population, while expatriates well developed and boasts of world-class make up the other 44 per cent. The growth civic amenities and infrastructure. in the Omani population ranges from 2.5% to 4.2%. Holding a strategically important position at the mouth of the Persian Gulf, the country The vast majority of Oman’s population shares land borders with the United Arab follows the Islamic faith and they are proud Emirates to the northwest, Saudi Arabia of their history and traditions. Omanis to the west, Yemen to the southwest, are tolerant people and other religions are and shares marine borders with Iran and freely practiced by the sizeable expatriate Pakistan. The coast is formed by the population of Oman. Arabian Sea on the southeast and the Gulf The offi cial language of the country is Arabic, of Oman on the northeast. The Madha and though English is an accepted business Musandam exclaves are surrounded by the language. Applications to Government UAE on their land borders, with the Strait and other offi cial correspondence need to of Hormuz (which it shares with Iran) and be in Arabic. Royal Decrees, Ministerial www.crowe.om 6 Decisions and Government publications are • The Tender Board, which is responsible issued only in Arabic, although unoffi cial for the award of all major civilian translations are available. Government tenders, and for following up developments in the implementation Constitution of projects from their inception until their completion. The constitution of the Sultanate is enshrined in the Basic Law of the State which Council of Oman came into effect on its promulgation on 6 November 1996.