Foreign Owned Investment Vehicles in Oman Published Date: 24 Jun 2022


After the promulgation of Foreign Capital Investment Law (Royal Decree 50/2019) (“FCIL”), Oman allowed foreign investors to own 100% of the investment vehicle such as a limited liability company without any dependency upon an Omani national, as was the case previously. While FCIL provided the general framework under which foreign investment vehicles can register and operate, details regarding the conditions for obtaining licenses, permits and concessions were left to be filled in by way of regulations which were issued vide Ministerial Decision No. 72/2020 (“Executive Regulations”).

For brevity, FCIL is not applicable to Gulf investments, the Special Economic Zone at Duqm, the Public Establishment for Industrial Estates or free zones. Please also note that FCIL bars the foreign investor from carrying out certain activities which are reserved for Omani nationals only.

Investment License:

In terms of Article 6 of the Executive Regulations, wholly foreign owned investment project cannot be set up in Oman unless the investor(s) obtain the Investment License (“License”). Please note that in order to obtain the License, prospective investors need to hire the services of, inter alia, a registered legal consultancy office, which will certify the completeness of the foreign investor’s application and submit the same with the competent authority for obtaining the License.

In terms of Article 8 of Executive Regulations, every prospective foreign investor needs to provide the following information:

  1. personal information;
  2. bank details;
  3. expertise in the proposed activity (if any);
  4. number of workers to be employed in the project;
  5. schedule for implementation of the project;
  6. feasibility study; and
  7. certificate issued by the legal consultancy office.

Further information may be sought depending upon the special requirements of the activities which the investor(s) wish to carry out.

General Exemptions:

Article 17, read with Article 18, of the Executive Regulations provides that a project established in less developed regions of Oman may enjoy exemptions from:

  1. rental value or fee of usufruct of the lands necessary for the investment project for a period not exceeding (5) five years;
  2. specified Omanisation ratios for a period of (2) two years;
  3. all or some of the fee.

Foregoing or other exemptions may only be granted provided the investment project is operative and depends on foreign cash, received as per rules of Central Bank of Oman, and meets one of the following conditions:

  1. at least forty percent (40%) of the project’s production, if any, shall be Omani;
  2. project shall export at least thirty percent (30%) of its production outside Oman; or
  3. project shall transfer expertise, modern technology and knowledge to Oman.


Tax Exemptions:

While Article 22 of FCIL provided that the tax exemptions available under the Oman’s Income Tax Law shall be available to the foreign investors, Article 19 of the Executive Regulations lists the following investment projects which shall be allowed special exemption from the taxes, customs and non-customs duties:

  1. Integrated tourism projects;
  2. Information technology and communications projects;
  3. Industrial projects whose cost exceeds OMR ten million (10,000,000);
  4. Projects related to the transport sector and seaports (logistics);
  5. Strategic projects determined by a decision of the Competent Authority;
  6. The projects in which the employed national manpower is not less than two hundred (200)  workers or in which the Omanisation ratio exceeds (25%) twenty-five percent of the prescribed Omanisation ratios, provided that modern technology means are used in the production or provision of services;
  7. Industrial projects using Omani raw material;
  8. Any other projects determined by the Competent Authority.

Right to Rent / Usufruct:

Article 19 of FCIL provides that the foreign investor can acquire land by way of usufruct without the need to comply with the provisions of usufruct law meaning thereby that the foreign investor does not need to, inter alia, satisfy the competent body regarding the purpose and benefits that usufruct will entail for the society or economy of Oman. This right has been further elaborated under the Executive Regulations whereby the foreign investor can get exemption from rent or usufruct amount, as narrated herein before, by way of submitting a bank guarantee as required under Article 29 of the Executive Regulations.

Furthermore, Article 30 of the Executive Regulations sets the term of the rent or usufruct at 50 years, renewable, provided that the investment project remains operational.

Reporting Requirements:

Article 38 of the Executive Regulations makes it mandatory for the foreign investor to submit an annual report, within sixty (60) days following expiry of the fiscal year covering the audited financials of the investment project, statement on the number of workers etc.

Existing Investors:

Existing foreign owned companies can also benefit from the law and alter the composition of shareholding where the Omani partner is obliged to transfer the shares to the foreign partner, upon demand or through a mechanism already defined in their internal agreement. However, one must undertake due diligence prior to exercising the foregoing option to ensure the impact of transfer on company’s prevailing contractual obligations.

Promulgation of FCIL and implementation of Executive Regulations reflects a strong shift in the Oman’s approach to open up its market and economy to foreign investors by allowing them substantial monetary benefits and exemptions along with full control of the investment.

It is also pertinent to note that FCIL has drawn considerable attention from foreign investors who now see Oman as a favorable economic destination.