1. Doing business in Oman April 2008

2. 14 April 2008Doing Business in OmanPage 2 Index of topics ► Business climate ► Legal system ► Business structures ► Tax system ► Free Zones and Industrial Estates ► Labour ► Commercial issues ► International Agreements and Treaties

3. 14 April 2008Doing Business in OmanPage 3 Business Climate ► Business friendly government ► A robust legal system ► A vibrant capital market ► The second best performing Arab Economy (out of 40) ► The most peaceful country in the Middle East (out of 18)

4. 14 April 2008Doing Business in OmanPage 4 Legal system ► Primary court ► Appeals court ► The Supreme court

5. 14 April 2008Doing Business in OmanPage 5 Regulated industries ► Sector Law (Electricity and Water) ► Banking ► Insurance ► Mining ► Tourism ► Privatisation ► Telecom Regulatory Authority

6. 14 April 2008Doing Business in OmanPage 6 GCC Privileges ► GCC nationals are treated at par with Omani nationals ► GCC common market from 1 January 2008 ► GCC customs union already in force ► GCC nationals ownership of real estate

7. 14 April 2008Doing Business in OmanPage 7 Business structures Short term ► Branches of foreign companies ► Joint ventures Long term ► Limited Liability Companies (LLC) ► Public Joint Stock companies (SAOG) ► Closed Joint Stock companies (SAOC) ► Commercial Representative Offices

8. 14 April 2008Doing Business in OmanPage 8 Business structures (contd.) Branch of a foreign company ► 100% foreign ownership ► A Contract with the Government or quasi Government organisation is a pre-requisite ► Registration is valid for the contract duration ► Continuity of a branch operation is not guaranteed ► Tax rates range from 5% to 30% ► Branch of a GCC registered company is taxed at 12% ( not for Free Trade Zone entities) ► Effective tax rates may be higher due to related party disallowances

9. 14 April 2008Doing Business in OmanPage 9 Business structures (contd.) Joint ventures ► Not a legal entity ► Taxable entity ► Not a consortium ► Share of profits is not taxable for partners ► Usually contract specific ► Liability of partners is unlimited

10. 14 April 2008Doing Business in OmanPage 10 Business structures (contd.) Mixed companies - LLC ► Up to 70% foreign ownership is available ► No requirement for a sponsor ► Limited liability of shareholders ► Minimum capital of RO 150 K ► Company is managed by a manager ► Shareholder relationships are flexible ► No external reporting is required ► Tax rate applicable is 12% on taxable income in excess of RO 30,000 ► Dividend received by shareholders is not taxable

11. 14 April 2008Doing Business in OmanPage 11 Business structures (contd.) Mixed companies - Public Joint Stock Companies (SAOG) ► Minimum capital of RO 2,000 K ► SAOGs are preferred for privatisation projects ► Managed by a board of directors ► High level of transparency and disclosures ► Transferability of shares ► Tax rate applicable is 12% on taxable income in excess of RO 30,000

12. 14 April 2008Doing Business in OmanPage 12 Business structures (contd.) Mixed companies - Closed Joint Stock Companies (SAOC) ► Minimum capital of RO 500 K ► Shares are not required to be offered to public ► Managed by a board of directors ► Exit option ► Regulated by the CMA

13. 14 April 2008Doing Business in OmanPage 13 Commercial Representative Offices ► Registrations are allowed ► Specific functions – Mainly promotion/liaison ► Imports/ Exports/ Sales – not allowed

14. 14 April 2008Doing Business in OmanPage 14 100% Foreign Owned Companies ► FCIL permits 100% foreign owned entity ► Special approval from the Council of Ministers is necessary ► The minimum capital is RO 500K ► A number of companies have been already registered

15. 14 April 2008Doing Business in OmanPage 15 Omani tax system ► Corporate tax is payable by all entities ► No personal taxation ► Customs duty @ 5% ► Social security for Omani employees ► Vocational training levy - RO 100 per employee ► No sales tax or VAT ► No stamp duties ► A new Tax Law is expected ► Introduction of VAT ?

16. 14 April 2008Doing Business in OmanPage 16 Omani tax system (contd.) Corporate tax Current tax rates Min Max. ► Any company registered in Oman12%12% ► Branches of GCC companies12%12% ► Branches of other foreign companies 5%30% ► Final WHT on certain types of payments10%10%

17. 14 April 2008Doing Business in OmanPage 17 Omani tax system (contd.) Tax exemptions 5 years tax exemption for: ► companies registered in Oman ► engaged in activities such as: ► Industrial, Fishing and Fish processing, Exports ► Agriculture, Tourism, Public utility ► Education, Hospitals, Airlines, Shipping ► A further renewal of 5 years is possible ► Losses during tax exemption period are allowed to be carried forward in specific circumstances

18. 14 April 2008Doing Business in OmanPage 18 Land Ownership ► Generally limited to Omanis ► GCC nationals – under certain circumstances ► Foreigners – in Integrated Tourism complexes

19. 14 April 2008Doing Business in OmanPage 19 Intellectual Property related laws ► Trade marks law ► Patents law ► Copyrights law

20. 14 April 2008Doing Business in OmanPage 20 International Agreements and Treaties The Sultanate of Oman has entered into Double Tax Treaty (DTT) agreements with a number of countries. There are also a number of Investment Protection Agreements with several countries. A Free Trade Agreement has been signed with the USA

21. Thank you all