Monday, August 22, 2016

Health and Safety in Oman

What is the main legislation governing health and safety in Oman?
Generally, the laws concerning health and safety in Oman are contained in:
(i) Royal Decree 35/2003 promulgating the Oman Labour Law; and

(ii) Ministerial Decision 286/2008 – the Regulation of Occupational Safety and Health for the Establishments.
Are there any material differences between health and safety legislation in Oman and other major jurisdictions?
There are no material differences. Oman’s health and safety regime is similar to other jurisdictions.
What are the main bodies responsible for health and safety monitoring, regulation and prosecution in Oman?
What are their key powers?
The main body responsible for health and safety monitoring in Oman is the Ministry of Manpower, and its various departments including the Department of Vocational Safety and Health (the “Department”).
The Ministry of Manpower has a number of powers with regard to health and safety, including the power to:
  • investigate any breach;
  • impose penalties on entities in breach of the Law;
  • take necessary measures for the closure of the place of work, fully or partially, or the suspension of the use of equipment until it is satisfied that the causes of the risk have disappeared; and
  • refer violations to the Royal Oman Police.
Following an accident or a fatality - what reporting is required? What investigations may follow?
The owner of an enterprise must notify the Directorate General of Labour Welfare at the Department in writing within 24 hours of any major incident taking place and of every industrial accident or vocational disease that has been established. The owner must also notify the Public Authority for Social Insurance of any industrial accident involving workers with relevant insurance cover.
What are the core health and safety records that companies must keep?
The core health and safety records that a company is required to keep will depend upon the nature of the work it is undertaking, for example:
(i) if a company uses scaffolding for the purpose of building, the scaffolding must be installed by a competent person who shall test them at least once every week and the test must be recorded in a special register maintained for such purpose;
(ii) regarding the use of boilers and steam and air stores, the boilers must be tested every 12 months and the steam and air stores every 24 months by a competent technician and a special register shall be maintained to record the date of the test and the technician’s name and remarks;
(iii) regarding the use of chemical substances, a special register shall be opened for hazardous chemical substances to immediately record information related to the safety of their circulation and use and the movement of such substances;
(iv) where relevant, equipment for measuring chemical agents in the work environment shall be provided according to the nature of the business conducted; necessary periodical measurements must be taken, recorded in a special register and compared periodically to ascertain that they are within the secure limits fixed by the competent authorities; and
(v) fire devices must also be tested at least once every six months by a specialist and recorded in a special register.
What are the obligations of an employer to report health and safety breaches?
The owner of an enterprise employing 50 or more workers must provide the Department with periodical statistics on major incidents, industrial accidents and vocational diseases that have occurred. The statistics must be submitted in the months of January and July of each year.
Additionally, the owner of an enterprise must notify the Department or the section in writing within 24 hours of every major incident taking place in the enterprise, every industrial accident or vocational disease that has been established. He must notify the Public Authority for Social Insurance of an industrial accident involving workers carrying insurance cover.
Are there any specific rules governing working time?
Workers must not work on construction sites or open uncovered areas of high temperatures between the hours of 12.30 pm to 3.30 pm throughout the months of June, July and August, subject to certain exemptions to those establishments providing essential public services.
What are the potential penalties an employer may face for breach?
With regard to any breach or alleged breach of any law regarding health and safety, inspectors have authority to take the following measures:
(i) issue the necessary orders for rectification within a specified period of time; and
(ii) immediately suspend work fully or partly, or require discontinuation of the operation of one or more machines in cases of an imminent danger, including seeking the assistance of the Royal Oman Police, if required.
The law also provides for penalties for violation of industrial security. In the event of a violation relating to industrial security, without prejudice to a harsher punishment stipulated in Oman Labour Law or any other law, an employer or his representative shall be penalized by a minimum fine of OMR 100 and a maximum of OMR 500 and/or imprisonment for a period not exceeding one month. The penalty can be doubled for repeat offences.
Are there any specific rules regarding health and safety in different work areas?
Further to the above, there are specific rules regarding health and safety in relation to the following:
  • working in extreme temperatures;
  • working at heights;
  • working in confined spaces;
  • working with dangerous substances, radiation and chemicals;
  • manual handling of heavy goods;
  • noise, vibration and lighting;
  • equipment and machinery; and
  • transportation of dangerous goods and substances.


Monday, August 15, 2016

The MOCI Invest Easy System

Seen as integral in promoting investments and improving the future of the economy, the Invest Easy service is the culmination of a decade-long plan to create an innovative, open, and reliable business environment.
The early 2000s saw a rethink, by the MOCI, of the commercial registration process. The passing of Executive Regulation 121/86 on the Commercial Register Law sparked the first wave of integration in a One-Stop Shop system (the “OSS”). The OSS allows those requiring access to various governmental departments to come to one place for the majority of their dealings. Moreover, 2003 saw an initiative to incorporate technology into this process and a system streamlining certain business aspects was rolled out in 2006. Despite being limited in accessibility and in substance, it resulted in an increase in the number of commercial registrations. Following further regulation and planning, the beginning of 2014 marked the introduction of the Invest Easy portal, allowing a number of essential business tasks to be completed online 24/7.
In order to improve and simplify the user experience, the MOCI keeps a constant dialogue with entrepreneurs, law firms, and companies and, term by term, the user has seen an expansion in the capabilities of the system as well as the streamlining of the administrative processes. Recent improvements are a result of this dialogue and have included the possibility for law firms and other registered users to pay for transactions online without a point of sale system, and to access commercial registration information and certificates for free.
Fundamentally, the online portal allows investors to quickly and securely register a new business in the Commercial Register. Upon establishment, businesses can complete a number of tasks including but not limited to: updating company information (name, share capital, shareholders, etc.), accessing information about other commercial entities, submitting license applications and including in their registrations over 210 different unlicensed commercial activities. Moreover, the portal also provides clear and simplified information on numerous procedures, and enables users to update all their new data online. New additions relating to the registration and management of commercial agencies are expected by the end of July 2016.
Following the general intention to simplify the management of businesses in Oman, the MOCI has taken the decision to consolidate the Certificate of Incorporation and the Commercial Registration Information of all registered companies in a new document, the Commercial Registration Certificate, and has abolished, effective 1 June 2016, the authorised signatories form, i.e., the form setting out the specimen signatures of the persons authorised to act on behalf of the company. The details of the authorised signatories are now set out in the Commercial Registration Certificate, which now is a Digitally Signed Form, signed and certified using a Digital Signature Certificate as per the Electronic Transactions Law (Royal Decree 69/2008).
Currently, the portal is working in cooperation with Ministry of Manpower, Royal Oman Police, Ministry of Environment and Climate Affairs, Muscat Municipality, Oman Chamber of Commerce and Industry and many other government entities.
Nortal, the software architects of the portal, have noted that in the first six months of the new commercial registration service implemented in Oman, of the over twelve thousand new companies which were registered, 1,000 were registered using the portal, with that proportion increasing month by month. In September of 2015, 16.7% of the total company registrations came through Invest Easy.
If diversification is to come into the economy, systems such as Invest Easy are instrumental in attracting new investment into Oman. Despite its long teething problems, the system is a drastic improvement from having to attend various ministerial departments costing time and money to investors and firms.


Monday, August 8, 2016

The Establishment of US Companies and Branches Under the Oman/United States Free Trade Agreement

The Free Trade Agreement (the “FTA”) between the Sultanate of Oman and the United States (the “US”) and entered into force on 1 January 2009 governs, inter alia, the establishment of legal entities in Oman by entities incorporated in the United States and vice versa.
In a previous article, we discussed the early stages of implementation of the FTA. The first meeting of the FTA Joint Committee, chaired jointly by the MOCI and the Office of US Trade Representative, took place in February 2010. Since then, officials of the two governments have been meeting on a regular basis within that framework to discuss various issues arising pursuant to the implementation of the FTA.
Below is an outline of three key issues that have been addressed concerning the establishment of companies and branches of companies in Oman.
Under the FTA, only 100% US-owned entities are permitted to establish a company in Oman without the need for an Omani partner. However, the strict interpretation of this rule affected large US corporations, including the ones listed on the stock market, which, having a wide shareholder base that includes some non-US citizens, would not qualify. Accordingly, the MOCI has taken the view that, provided that the company which is seeking registration in Oman is a qualitatively “American” entity, there should be no problems registering it under the US FTA in Oman. The MOCI reviews whether a company should be considered as qualitatively “American” on case-by-case basis, looking at a variety of factors such as the activities and history of the company. In some cases, the MOCI will not delve into the nationalities of its shareholders.
The minimum capital requirement for a 100% US-owned entity to become established in Oman is OMR 20,000 as opposed to other foreign-owned companies, where the minimum share capital requirement is OMR 150,000. The registration process for a US-owned entity in Oman is straightforward and has been streamlined.
Equal treatment
One of the benefits for US companies under the FTA rule is that US companies shall be granted the same treatment in Oman as a wholly owned Omani company. However, there is an important exception to this rule. That is, an established US company is not permitted to act as the “local partner” of another foreign company wishing to set up a presence in Oman, i.e., a US company cannot be used to satisfy the minimum 30% local ownership requirement for a foreign company looking to establish in Oman. This requirement can only be satisfied by an Omani national or a 100% Omani-owned company.
Registration of a branch
As a general rule, a foreign company can only establish a branch office in Oman for the purpose of performing a contract with the Omani Government (including contracts with companies partly owned by the Omani Government).
However, a US company may register a branch office in Oman pursuant to Ministerial Decision 102/2008 and in accordance with the FTA prior to obtaining or entering into any contract with the Omani Government (including contracts with companies partly owned by the Omani government).
Benefits for US FTA companies operating in Oman
Further to the above, US companies established in Oman under the FTA have a number of other significant benefits for example, benefits regarding tariffs for importing and exporting, and in the way that US companies established in Oman are granted non-discriminatory rights to bid on contracts to supply Omani Government entities and Omani Government purchasers.


Monday, August 1, 2016

Knowledge Oasis Muscat

Knowledge Oasis Muscat (“KOM”) is a 20,000-square-metre technology park situated near Muscat International Airport, whose objective is to support technology-oriented businesses. In addition to the advantages available in other industrial estates, it also provides technical support and services for businesses established at KOM.
KOM is managed by the Public Establishment for Industrial Estates (the “PEIE”).
KOM offers various advantages to foreign investors:
  1. KOM companies may have 100% foreign ownership.
  2.  Another major advantage is that KOM companies, even those with 100% foreign ownership, are only required to have a minimum share capital of OMR 20,000.
  3. The Omanization target in KOM currently starts at 10% for the first year, with 5% incremental annual increases up to a maximum of 25% within five years. (This compares with a figure of 35% outside KOM.)
  4. KOM companies may be registered with the Tender Board regardless of their share capital and classification and are not required to fulfil the minimum capital requirements for such registration.
  5. No personal income tax is payable, and there are no foreign exchange controls.
  6. The cluster of information technology-related companies in KOM is in itself an incentive for other technology-oriented companies to establish their presence in the estate.

Tenant selection procedure
Tenants must meet at least one of the following four criteria:
  1. They must operate within a technology or knowledge-based enterprise sector, and must commit to the research, development or commercial exploitation of information and communications technologies (“ICT”) in any genuine technology field.
  2. They must specialize in the design or development of products or processes in areas such as telecoms, IT, the internet, new media, etc.
  3. The workforce must comprise a high proportion of “knowledge workers”. A minimum of 25% of the workforce must be qualified technologists, scientists or engineers.
  4. Finally, there is a further category of secondary tenants whose business is to provide services to primary tenants. Permissible activities include financial services and other convenience and professional services.

Application process
  1. The application process involves the submission of a duly completed application form with supporting documents followed by an invitation for an interview/presentation before the selection committee of KOM.
  2. If the application is approved, an offer letter is sent detailing the terms and conditions.
  3. The main condition is the payment of advance rent for one year (minimum OMR 5, 400 for a space of 50 square metres).
  4. Once the rent has been paid, the company can then be registered as a KOM company with the Ministry of Commerce & Industry (the “MOCI”).

A memorandum of understanding (“MOU”) will then be entered into between KOM and the company leading to the commencement of the company’s operation.


Wednesday, July 20, 2016

Airline Carrier Liability for Flight Delays

In recent years, there have been numerous commercial claims brought by airline passengers who seek compensation  for  alleged  damages  arising  from  flight  delays.     This  article  will  discuss  the circumstances under which a passenger may be entitled to compensation for a flight delay, in scenarios involving both domestic and international travel.

It is important to note that Omani domestic law will apply to all domestic journeys.  Conversely, and as discussed below, the provisions of the Convention for the Unification of Certain Rules for International Carriage by Air (the “Montreal Convention”) will apply to all international journeys.

Remedies for flight delays for domestic flights

Passengers who pursue claims for flight delays for domestic flights frequently cite Articles 183 and 204 of the Sultani Decree 55 1990 (the “Law of Commerce”) when attempting to establish an airlines’ purported legal liability:

  1. Article 183 requires airline carriers “to carry the passenger…to the place of arrival at the time agreed, or as stated in the schedules of carriage.”
  2. Article 204 states that airline carriers are liable for any “detriment resulting from delay in the arrival of the passenger.”

However, whilst Articles 183 and 204 establish certain travel obligations upon airline carriers, Article
205 of the Law of Commerce sets out the mitigating factors which will absolve an airline carrier from any legal liability for purported damages arising from a passenger delay.

Article 205 of the Law of Commerce provides that an airline will be “absolved from liability” if it can prove that it had taken “all measures necessary to avert the detriment, or that it was impossible” for it to have prevented the delay.

Furthermore, the amount of compensation to which a passenger may be entitled will depend on whether the airline is considered to be responsible for having caused the delay by virtue of some “unreasonable” act.  Therefore, it is of critical importance to understand what occurrences, or types of causes for delays, may be attributed to the airlines.

Delays arising from and caused by extenuating circumstances, such as inclement weather or air traffic, cannot be reasonably attributed to the carrier.  Therefore, in these scenarios, because it is “impossible” for the airline to have mitigated the causes for the delay, the airline would not ordinarily be held legally responsible in these circumstances.

Remedies for flight delays for international flights, as set out by the Montreal Convention

The Montreal Convention is a multinational treaty, which establishes certain international norms and guidelines regarding international travel.  The Montreal Convention has been incorporated into Omani law by way of Article 3 of the Civil Aviation Law (promulgated by Sultani Decree 93 2004).

As set out in Article 1.1 of the Montreal Convention, the Montreal Convention will apply to “all international carriage of persons.”  Furthermore, as set out in Article 1.2 of the Montreal Convention:

“international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage…are situated within the territories of two States Parties.”

Therefore, the Montreal Convention will apply to every individual flight of a passenger’s voyage whenever the original departure and the final destination are two different States.  For example, if a passenger travels from Salalah to London, with a stopover in Muscat, as part of a continuous voyage, the Montreal Convention will likewise apply to the Salalah-Muscat flight.

Article 19 of the Montreal Convention provides that airline carriers may be liable for “damages” occasioned by a flight delay only if the carrier has failed to take all measures that were “reasonably required  to  avoid  the damage  or  that  it was impossible  for  it,  or  them,  to  take  such  measures.” Therefore, as is the case under Omani domestic law, airline carriers will only be liable for damages occasioned if an “unreasonable” act by the carrier caused the delay.

Further, under international law, it is likewise understood that an airline cannot be considered to have acted unreasonably if the cause of a delay results from an overriding event, such as inclement weather, airport traffic, security threats, or even a mechanical delay.  Therefore, in such cases, the airline cannot be held liable for any resulting excess “damages” incurred.


Wednesday, July 13, 2016

Ramadan Timing and Calculation of Overtime During Ramadan

The Ministry of Manpower has formulated certain regulations to be followed during the holy month of Ramadan.  The Omani Labour Law, promulgated by Sultani Decree 35 2003 and its amendments, specifies in Article 68 that the working hours for Muslims during the Holy Month of Ramadan shall be six hours per day, or a maximum of thirty hours per week.

Article 70 of the Omani Labour Law further provides that an employee may be required to work for more hours than prescribed by Article 68, if the nature of work necessitates working more hours. However, under no circumstances may the total working hours exceed the prescribed working hours. Further, as part of the employee’s entitlement, the employer must grant the employee not less than two consecutive days of rest per week after five continuous working days.

When it comes to overtime work undertaken by workers, the employer is required to pay the worker an extra payment equal to his/her basic salary against the extra work hours plus 25% at least for daytime  working  hours,  and  50%  for  nighttime  working  hours.    Additionally,  if  such  work  is performed during the weekly day of rest or during the official holidays, the employee shall, unless compensated with another day, be entitled to double of his/her gross salary for such a day.  The Ministry  of  Manpower  has,  by  way  of  Ministerial  Decision  1  1976,  provided  that  such overtime payment provisions will not apply to senior private sector employees, such as professionals including “doctors,  engineers  and  those  of  similar  standard”  or  those  persons  who  undertake  dual  roles involving “administrative and supervisory work.”

Notwithstanding the above, the Omani Labour Law also provides that those employers engaged in works carried out at ports and airports or on board ships, vessels, or aircraft may agree to pay employees an allowance in lieu of overtime, subject to the approval of the Ministry of Manpower.  It may be possible for companies in this instance to seek the approval of the Ministry of Manpower to provide an allowance to the employees in lieu of overtime.

During the month of Ramadan, the employer must ensure, with regard to employees’ extra working hours, that any arrangement that the employer and the employee agree upon can be adopted, as long as it does not violate the provisions of the Omani Labour Law.  A Muslim worker must therefore work for a maximum of six hours per day or thirty hours per week, irrespective of whether the work is undertaken during the night or during the day.  Though the maximum working hours for Muslim employees during Ramadan is six hours per day, Article 70 of the Oman Labour Law grants an exemption and permits the employee and employer to agree in advance any additional working hours and the consideration in lieu for the same.  Accordingly, any additional hours that a Muslim employee will be required to work will be construed as overtime work.  The employer will therefore be legally required to compensate the extra hours worked by the Muslim employees during Ramadan in accordance with Article 73 of the Oman Labour Law.

Further, it is also recommended that the employer communicates the Ramadan work timings to the Muslim workers and that the overtime calculation system is explained to them in order to avoid misunderstandings and potential disputes.


Wednesday, July 6, 2016

Oman's New Anti-Money Laundering Law

Sultani Decree 30 2016 (the “New Law”) has recently been promulgated setting out Oman’s new anti- money laundering and terrorism financing regime.   The New Law, which provides a more comprehensive set of rules consistent with internationally approved standards, replaces the previous law issued under Sultani Decree 79 2010 (the “Old Law”).

The New Law has largely come about as a result of a desire for the Sultanate to adhere to recognised international standards with regard to anti-money laundering and terrorism financing.  The New Law was created with the aim of addressing the concerns raised in Oman’s Mutual Joint Evaluation Report of 2010, amended and issued by the International Financial Action Task Force in 2013.   Further, the New Law was issued in compliance with the requirements of various international agreements and treaties ratified by Oman in respect of anti-money laundering and terrorism financing.

National Centre for Financial Information

The New Law establishes the National Centre for Financial Information (“Centre”).  Unlike the existing Financial Intelligence Unit (“FIU”), which is part of the Royal Oman Police, the new Centre will have complete autonomy, with financial and legal independence.  The Inspector General will decide which employees of the FIU will be transferred to the Centre.  The responsibilities of the Centre will include, amongst others, all responsibilities previously held by the FIU.

Areas of focus

The New Law focusses on risk assessment and preventative measures including know-your-client procedures and due diligence on customer identification.   Such measures include increasing the responsibility on financial and non-financial institutions to extensively check their accounts, records and employee details as well as anything else that may intimate money laundering or terrorism financing.

The changes also focus on Politically Exposed Persons who represent risks, correspondent banking relationships, financial operations, sanctions on financial institutions and non-financial businesses, professions and financial institutions, with particular regard to those countries that do not adequately apply proper financial standards.

The New Law also contains provisions concerning international cooperation, customs declarations and strengthening sanctions imposed on violators.


The New Law has provided the public prosecutor with wider powers in relation to investigating potential breaches of the law.  Such powers include the right to ask for any documents in relation to any entity, be it private or public.  The public prosecutor, in conjunction with the Royal Oman Police, may also employ techniques that are used to capture criminals, including wiretapping, staking out, using undercover police, freezing accounts, applying travel bans and several other measures.  The New Law provides for greater cooperation with other countries in relation to finding, capturing and extraditing violators.


Penalties under the New Law for breach are much more severe than under the Old Law.  For example, the minimum prison sentence for breach under the New Law is five years, whereas it was three years under the Old Law.  Financial penalties under the New Law are also much higher than under the Old Law.  For example, under the New Law, violators face a minimum penalty of OMR 50,000, whereas the minimum penalty under the Old Law was OMR 5,000.

The New Law has given the courts the power of reducing or even potentially excluding liability to those  persons  who  come  forward  and  provide  information  regarding  money  laundering  or  the financing of terrorism.


The New Law has addressed the legislative shortcomings of the Old Law and has created a comprehensive  framework  combatting  money  laundering  and  terrorism  financing  in  line  with approved international recommendations.

We expect that the New Law will have a major impact on how the concerned authorities will be able to act in relation to anti-money laundering and terrorism financing types of activities, in light of having been granted broader investigative powers.


Wednesday, June 29, 2016

Proposed VAT for Oman

Why a VAT?

Oman is the largest oil and natural gas producer in the Middle East that is not a member of the Organisation of Petroleum Exporting Countries, otherwise known as OPEC.  In the past 50 years Oman has enjoyed a lucrative revenue stream from its taxation of oil and gas, accounting for more than 70% of the Oman Government’s revenue, with a current tax rate of 55% on the sale of petroleum products. The Omani Government’s Vision 2020 plan, the final part of which is the five-year plan covering the period 2016 to 2020, aims to reduce Oman’s reliance on oil and gas production by diversifying into the services, transportation, industrial, tourism and financial sectors of the economy. This coupled with dramatic drops in the oil price in the region of 40% from its peak in 2015, and a significant budget deficit for the Oman Government, signalled the need to diversify the taxation revenue regime, remove the subsidies for petrol and roll back subsidies for domestic oil and gas consumption.  The introduction of a value added tax (VAT), from somewhere between mid-2017 and the beginning of 2018, in Oman will form part of a broader taxation strategy to be introduced by the Omani Government for Oman to resolve the revenue shortfall and assist in the diversification of the economy.  The intention is that the VAT in Oman will be derived from a framework agreed by all GCC member states (Member States) as part of a regional VAT strategy (GCC VAT Agreement).

What is a VAT?

A VAT is a tax imposed on most transactions in the production and distribution process.   Over 150 countries worldwide have implemented a VAT (or the equivalent Goods and Services Tax). This consumption-based tax is ultimately paid by the customer in the end price for goods and services, though businesses involved in the production and distribution process are assigned the responsibility of collecting the tax, as and when the goods and services are produced and distributed.  It differs from a sales tax in that a sales tax is only imposed on the final sale to the customer.  The VAT tax rate in Oman is likely to be in the region of 3 to 5%.  Businesses may deduct the tax paid on the inputs from the output tax (or VAT) charged to the customer.  The input tax cannot be recovered for goods and services used in the production or distribution process where those goods or services are either tax- exempt or used for non-business purposes.  The VAT is distinct from the corporate income tax in Oman which is levied upon the business itself.

GCC framework for the VAT

The VAT in Oman will be derived from a framework agreed by all Member States as part of a regional VAT strategy.  The unified approach of the six Member States in respect of the VAT enables the economies of the Member States to compete with one another in the supply of goods and services, without creating distortions across the GCC, caused by either the structure or the implementation of the VAT being different in each Member State.  The Member States intend to agree a unified VAT tax framework following which each Member State will implement its own VAT law on the basis of the GCC VAT Agreement agreed by the Member States.  It is intended that the agreed framework is likely to address issues such as the scope of the VAT (which will include both goods and services), the place and the time of supply rules, valuation rules and rules applicable to input tax exemptions, intra-GCC supply of goods and services, interpretation and application.   The UAE Ministry of Finance (UAE MOF) has advised through their website, on 20 June 2016, that the VAT is likely to be 5% and will require companies with an annual turnover in excess of a yet-unconfirmed amount to register for the VAT.  The threshold aims to protect small businesses. It is likely that Oman will have a similar VAT rate and threshold.

When will a VAT be introduced?

A VAT is likely to be introduced from 1 January 2018 across the GCC, though some sources advise it may be as early as mid-2017.  The six GCC countries intend to agree a framework for a unified customs and VAT law, and discussions are currently taking place between the ministries of finance from each of the six GCC Member States.  It was originally anticipated that the GCC VAT Agreement would be finalized by 30 June 2016 but with this date upon us it is likely the GCC VAT Agreement will be finalized in the months ahead. Provided the GCC VAT Agreement is agreed by the Member States by the end of June or close to the originally proposed date, this will allow sufficient time for the business communities in each of the Member States to prepare for the implementation of the VAT by the start of 2018.  Most businesses, and the respective governments in each Member State, will require at least 18 months, if not more, to establish payment and collection systems, respectively, for a VAT.  The UAE MOF has advised through its website, on 20 June 2016, that the VAT will be introduced in the UAE on 1 January 2018 and, accordingly, timelines are likely to be similar in Oman.

Ratification of a VAT agreement

Ratification of the GCC VAT Agreement will not occur until all Member States have adopted the agreement, failing which each Member State may elect to implement its own VAT.  Implementation of the national VAT law in Oman will occur only once the GCC VAT Agreement is ratified in Oman.

Prior to execution of the GCC VAT Agreement at the GCC Annual Submit in December of 2016, the GCC VAT Agreement must undergo several approvals from various governmental bodies in Oman. Once executed, the Ministry of Foreign Affairs (MOFA) has certain obligations to fulfill in order for execution of the GCC VAT Agreement to occur.   As any VAT law to be implemented in Oman would fall within the authority of the Ministry of Finance (MOF), MOFA will be obliged to liaise with the MOF and the Ministry of Legal Affairs (MOLA) to review and assess the GCC VAT Agreement and provide its recommendation as to whether it complies with Omani law, and also to consult with the State Consultative Council.   MOFA will only execute the GCC VAT Agreement once approval is received from MOLA and MOF.

Once executed, MOFA must submit the GCC VAT Agreement to the State Consultative Council comprised of the Council of State (Majis A’Dalwa) and the Consultative Council (Majlis A’Shura), in addition to the Cabinet of Ministers upon which they will provide their recommendations.   Following receipt of approval, MOFA will submit the a GCC VAT Agreement to the Diwan of the Royal Court for the Sultan’s approval to ratify the GCC VAT Agreement.   The GCC VAT Agreement will be ratified in the form of a Sultani Decree and published in the Official Gazette.  However, this does not mean the GCC VAT Agreement will be implemented as the VAT law.  A Sultani Decree enacting the provision of the GCC VAT Agreement (and any variations or additions to the GCC VAT Agreement) will be promulgated separately as a VAT law.

Promulgation of a VAT law in Oman

To implement the VAT law, the MOF and MOLA shall draft, amend and review the VAT law together. Other governmental bodies may need to review the draft.  The MOLA-approved draft is then sent to the State Consultative Council who will provide its amendments the draft law. Amendments are incorporated and sent to the Cabinet of Ministers who also review and suggest amendments to it. The Cabinet of Ministers-approved draft is then sent to the Sultan for his approval and the Sultani Decree is published in the Official Gazette upon which the VAT law will come into effect (unless an effective date is otherwise prescribed).


Timeframes for the process and execution, ratification or promulgation of a VAT law (or any law) are not prescribed by law, although one would assume, given the financial imperatives for Oman surrounding the implementation of this law, that the process would be expedited.  In practice, it is very difficult to predict with any certainty how long each governmental body will take to review and approve a VAT law. Additionally, the administrative processes to be established within the companies to be registered for VAT, as well as the administrative processes to be established by the Oman Government for the collection of the VAT, are significant and time-consuming processes.


Legal Updates

Ministerial Decision 139/2016 – listing new regulations related to registering commercial activities

In a move aimed at reducing barriers to foreign investment, the MOCI issued a new decision abolishing the minimum capital requirement for establishing a company in Oman. Under the new law, it will be left up to the investors to decide upon the amount of initial company capital.

Article 1 of the decision states that institutions and commercial corporations can be registered without any minimum capital requirement and without providing any certificates or documents pertaining to capital. This applies to all, except joint-stock corporations. This seeks to do away with the previous minimum capital requirement, which was considered high by foreign investors.

Article 2 states that the registered institutions and commercial corporations must present financial data related to their capital, along with any other data requested by the MOCI, within the first four months after the end of its business year. The MOCI will apply the financial disclosure system starting next year.

The MOCI has said that the decision aims to facilitate procedures, as laid down by the Ministry, making it easier for investors to conduct business, whether they are Omanis or foreigners.


Monday, June 27, 2016

Obtaining a Licence to Operate an Engineering Consultancy Office in Oman

Sultani Decree 27/2016: The Law Regulating the Work of Engineering Consultancy Offices has been issued, replacing Sultani Decree 120/94. There are two major features of this law: 1) it introduces a new section on penalties, and 2) it differentiates between individuals licenced to operate an office to provide services in one field of engineering (an “Engineering Office”) and those licenced to operate an office to provide consultancy services across multiple fields of engineering (an “Engineering Consultancy Office”).

An individual wishing to obtain an engineering consultancy licence in Oman must satisfy the following criteria: A. the individual must be an Omani national;

B. the individual must be committed to working full-time in the engineering office or the engineering consultancy office;

C. the individual cannot work in a profession or job unrelated to the licence granted to them, and should not have a direct or indirect interest in commercial or construction activities related to their engineering projects;

D. the individual must hold a bachelor degree in one engineering specialty or the equivalent thereto;

E. the individual must be competent and eligible; and

F. the individual must have a sound reputation and not convicted of a crime related to honor or trust, unless rehabilitated.