A foreign investor can own an Omani company outright, but only in an activity that is not prohibited, through a form the Commercial Companies Law recognizes, and with a license from the Investment Services Centre. Three texts carry most of the work: the Foreign Capital Investment Law (Royal Decree No. 50 of 2019), the Commercial Companies Law (Royal Decree No. 18 of 2019) and the executive regulations issued by Ministerial Decision No. 72 of 2020. Ministerial decisions then add the prohibited-activities list and the Omanization rules. This article follows the investor from license to first tax return and flags the points where older guides are now wrong.
The legal framework: the investment law, the companies law and the regulations
Article 3 of the Foreign Capital Investment Law permits foreign investment only in accordance with that law, and Article 6 provides that it is carried out by an establishment or company in a permitted activity, with the foreign investor owning the capital in whole or taking part in it, under a license issued by the Investment Services Centre. The law was published on 7 July 2019 and took effect in January 2020. Article 2 leaves the special regimes of Duqm and the free zones untouched.
The Commercial Companies Law, Royal Decree No. 18 of 2019, effective 17 April 2019, supplies the forms and the constitutive rules, and Article 6 gives the Ministry the power to register companies. The executive regulations, Ministerial Decision No. 72 of 2020, amended in March 2022 and by Ministerial Decision No. 411 of 2025, set procedures and timelines. A lawyer who reads only one of these texts will miss a duty that sits in another.
The foreign investor license and the Investment Services Centre
Article 5 of the Foreign Capital Investment Law gives the Investment Services Centre the task of registering the foreign investor and simplifying every approval, permit and license the project needs. If the Centre or a competent body does not answer within the periods set in the regulations, the same article deems the request accepted. Article 15 leaves the conditions, procedures and timelines to the regulations, and applications are filed through the Ministry's electronic investor platform.
Article 7 binds the investor to the timeline submitted with the feasibility study and bars substantial changes to the project without the Ministry's approval, and Article 8 requires the project to respect environmental, public health and safety laws. When we review a file we treat the feasibility study as a document the investor will be held to, not as a formality, and we draft it with the later change-approval rule in mind.
The prohibited-activities list
Article 14 of the Foreign Capital Investment Law leaves the list of activities closed to foreign investment to a decision of the Minister. The current list began with Ministerial Decision No. 209 of 2020 and was amended by Ministerial Decision No. 364 of 2023 and Ministerial Decision No. 435 of 2024. It is a list of prohibited activities, not of restricted ones, and the older description of a restricted list is wrong. Examples that appear in the published list include the production and sale of Omani halwa, khanjar making, retail of handicrafts, tailoring of the Omani kumma, transport and sale of drinking water, and vehicle repair activities. Chambers of commerce also report translation and recruitment offices as closed to foreign capital.
The practical risk is concealed trading. A foreign investor who places a prohibited activity in the name of an Omani partner commits an offense under Ministerial Decision No. 412 of 2023, which sets a fine of OMR 5,000 to 15,000 for concealed trading. We therefore check every activity code against the current list on the day the application is prepared, because the list has changed three times in four years, and we advise against any arrangement where an Omani name fronts for a foreign owner.
Company forms under the Commercial Companies Law
Article 4 of the Commercial Companies Law recognizes seven forms: the general partnership, the limited partnership, the joint venture, the joint stock company, the holding company, the limited liability company and the one-person company. Article 5 makes a company void if it does not adopt one of them, and Article 9 requires the constitutive documents to be in Arabic, failing which the company is void. Article 12 requires a company to have Omani nationality and its principal place of business in Oman, and Article 13 deals with companies with foreign capital, branches and representative offices.
For a foreign investor the choice is mostly between the limited liability company, the one-person company and a branch. General and limited partnerships carry unlimited liability for at least some partners and rarely suit a foreign group. The joint stock company suits larger projects and listed businesses. We start with the question of who will own the shares and how the investment is meant to be exited, since that decides the form more reliably than speed of registration.
The limited liability company
Under Article 234 of the Commercial Companies Law an LLC is formed by at least two and at most fifty persons, natural or legal, each liable for the company's debts only up to the value of its shares. The name may be a shareholder's name or any word or phrase that does not mislead about the objects or the owners, followed by the words "limited liability" or its abbreviation wherever it appears. The capital is divided into shares of equal value.
Article 239 allows contributions in cash or in kind, but not in services or labor. Where the contribution is in kind, Article 242 requires its type, location and value to be set out in a report by a valuation office or an auditor licensed in Oman, and a shareholder whose contribution proves overvalued must make up the difference in cash. This is a frequent trap for foreign groups that plan to contribute equipment or know-how, and we plan the valuation before the articles are signed.
The one-person company and the joint venture
Article 3 of the Commercial Companies Law lets a company be formed by one person, and Article 291 provides the one-person company as a vehicle in which a single owner holds all the capital with liability limited to it. For a foreign parent that wants full ownership without a local partner, it is the simplest structure, but it must still fall within an activity that the prohibited list leaves open.
The joint venture under Article 85 is a different instrument. It is a concealed company, with no separate legal personality, in which the parties share the results of a defined project. A foreign investor should not use it to enter a prohibited activity, and should not treat it as a substitute for a licensed company, since the foreign party would still need the right under the investment law to take part in the activity.
Branches, representative offices, free zones and the agency route
Article 4 of the executive regulations, Ministerial Decision No. 146 of 2021, lists the documents for registering a branch of a foreign company, and Ministerial Decision No. 245 of 2025 amended it. A branch no longer needs a qualifying government contract, which was a condition under the earlier regime. A representative office is limited to promotion and liaison and may not trade.
There are three other routes. The Commercial Agencies Law, Royal Decree No. 26 of 1977 as amended by Royal Decree No. 34 of 2014, governs a foreign supplier that appoints an Omani agent. The special economic zone of Duqm was set up by Royal Decree No. 119 of 2011 and Royal Decree No. 79 of 2013. The Salalah Free Zone rests on Royal Decree No. 62 of 2006, the Sohar Free Zone on Royal Decree No. 123 of 2010, and the Public Authority for Special Economic Zones and Free Zones was created by Royal Decree No. 105 of 2020. Each has its own licensing rules and its own incentives, and Article 2 of the investment law leaves them intact.
Registration, step by step
The constitutive documents are drafted in Arabic under Article 9 of the Commercial Companies Law. Foreign documents such as a parent's certificate of incorporation or a power of attorney must be notarized in the country of origin and legalized by apostille or consular process, with a certified Arabic translation. The application is filed with the Ministry through the electronic system, followed by registration with the Oman Chamber of Commerce and Industry under the Chamber system of Royal Decree No. 56 of 2022, and the municipality license for the premises under the Commercial Register Law, Royal Decree No. 3 of 1974.
Registration with the Tax Authority is a separate step. A company must register for income tax within sixty days, and for value added tax once it reaches the registration threshold. Trademarks are protected under the Industrial Property Law, Royal Decree No. 67 of 2008, and we file for the brand before launch.
Protections under the Foreign Capital Investment Law
The law gives real protection. Article 18 grants foreign projects the same benefits as national projects. Article 23 bars confiscation except by judicial decision, and Article 24 allows expropriation only for the public benefit and against compensation. Article 26 guarantees free transfer of capital, profits and proceeds abroad, and Article 27 deals with transfer of ownership of the project. Article 17 sends disputes to Omani courts or arbitration.
The license is also protected. Under Article 25 the license may be revoked only by a reasoned decision after a written warning and a period of up to thirty days. Article 28 gives thirty days to rectify a violation, and Article 29 sets the penalties in steps: loss of incentives, suspension for up to six months, and permanent revocation. Article 30 creates a grievance committee, Article 31 allows an appeal within sixty days with a decision due within thirty, and Article 33 sets a fine of OMR 20,000 to 150,000 for the offenses it lists.
Omanization after the 2025 amendments
Ministerial Decision No. 411 of 2025 added Article 12 bis to the executive regulations. A foreign-owned company must employ at least one Omani worker after a year from the start of its commercial activity, register that worker with the Social Protection Fund and follow the Omanization rates for its sector, and existing entities have six months to adjust. In June 2025 the Ministry of Labour set out a mechanism under which a foreign-owned company whose commercial registration is more than a year old must submit a plan to hire an Omani within three months, or face a ban on new work permits.
Employment is governed by the Labour Law, Royal Decree No. 53 of 2023, and social insurance by the Social Protection Law, Royal Decree No. 52 of 2023. Our standing advice is to budget for the Omani hire from the first business plan, and not to treat it as a later compliance event, since a ban on work permits stops a foreign-owned business from bringing in its own staff.
Taxes: income tax, withholding, VAT and the minimum tax
The Income Tax Law, Royal Decree No. 28 of 2009, sets a flat 15 percent rate on taxable income, as amended by Royal Decree No. 9 of 2017, with 3 percent for qualifying small enterprises. Oil and gas income under a concession is taxed at 55 percent. A 10 percent withholding tax applies to certain payments to non-residents, such as royalties, management fees, software and research and development. Older guides that credit the 15 percent rate to the 2017 decree are wrong, since that decree only amended the 2009 law.
Value added tax under Royal Decree No. 121 of 2020 is 5 percent, effective 16 April 2021, with mandatory registration at OMR 38,500 of annual supplies under Article 55 and voluntary registration at OMR 19,250 under Article 61. Royal Decree No. 70 of 2024 introduced a domestic minimum top-up tax of 15 percent from 1 January 2025 for groups with consolidated revenue of at least EUR 750 million.
What we review in an Oman company formation file
When we review an Oman formation, we start with the activity codes and test each against the prohibited list and the concealed trading rule. We choose the form under Article 4 of the Commercial Companies Law, draft the Arabic constitutive documents under Article 9, plan the valuation of any in-kind contribution under Article 242, and prepare the feasibility study with Articles 7 and 8 of the investment law in mind. We map the Omanization duty under Article 12 bis, the tax registrations, and the post-license calendar.
See also: company formation in Saudi Arabia and company formation in the UAE, plus our guides on company formation in Qatar and our Gulf company formation comparison.
Read also: Oman Dispute Resolution: Arbitration and Enforcement Guide
Frequently asked questions
Can a foreigner own 100 percent of a company in Oman?
Yes, in an activity that is not on the prohibited list. Article 6 of the Foreign Capital Investment Law lets a foreign investor own the capital of the company in whole, under a license from the Investment Services Centre, and Article 14 leaves the list of closed activities to a ministerial decision.
Is the Omani list restricted or prohibited?
It is a prohibition list. Ministerial Decision No. 209 of 2020, as amended by Decisions 364 of 2023 and 435 of 2024, names activities that foreign investment may not undertake at all.
Do I need an Omani partner?
No, not under the investment law. A one-person company under Article 291 of the Commercial Companies Law or a company with foreign capital under Article 13 can be wholly foreign-owned, but placing a prohibited activity in an Omani partner's name is concealed trading and carries a fine of OMR 5,000 to 15,000 under Ministerial Decision No. 412 of 2023.
What if the Centre does not answer my application?
Under Article 5 of the investment law, if no response is given within the periods set in the regulations, the request is deemed accepted.
Must I hire an Omani?
Yes. Article 12 bis of the executive regulations, added by Ministerial Decision No. 411 of 2025, requires at least one Omani worker after a year from the start of its commercial activity, registered with the Social Protection Fund.
What is the corporate tax rate in Oman?
Income tax is 15 percent under Royal Decree No. 28 of 2009, with 3 percent for qualifying small enterprises and 55 percent for oil and gas under concession.
Can the license be taken away?
Only by a reasoned decision. Article 25 requires a written warning and a period of up to thirty days first, and Article 31 gives sixty days to appeal.
Do you handle company formation in Oman for foreign investors?
Yes. We review the activity against the prohibited list, choose the form, draft the Arabic documents and plan the license, tax and Omanization steps. Contact us through our contact page to discuss your project.