Omanisation Compliance for Small and Medium Enterprises

The Government of Sultanate of Oman has recently showcased an increasing interest in the development and support of Small and Medium Enterprises (“SME”). The Ministry of Manpower has issued Ministerial Decision 103 of 2015 which clearly exempts SME from the set Omanisation percentage (“MD 103/2015”).

MD 103/2015 provides that SME will be exempted from Omanisation from the date of its incorporation for the duration of two years provided that the enterprise meets the following conditions:

1. The employer owns the enterprise;
2. The employer runs the enterprise on a full time basis;
3. The employer is registered with the Public Authority for Manpower Register as an employer; and
4. The employer is insured with the Public Authority for Social Insurance.

Once two years have elapsed, the Omanisation percentage specified in MD 103/2015 shall become applicable to these enterprises. MD 103/2015 further provides that an SME may gradually comply with the Omanisation percentage. After the initial two years have elapsed, the SME will be required to comply with a 25% Omanisation target. Thereafter, in each of the following years, the Omanisation target will increase by 25% until the SME has achieved 100% Omanisation.

According to MD 103/2015, SMEs engaged in the following business activities are exempted from complying with Omanisation requirements for an initial period of two years and are permitted to employ non-Omani employees: tailoring shops, cleaners employed in the business of sale of pre-owned cars, readymade garment shops, textiles, electrical tools, building material, fruits and vegetables, perfume and cosmetics, shoes, agricultural materials, furniture and sale of car spare parts. The Ministry views that this decision will allow SMEs to settle down over the initial two year period without having the burden of hiring employees. This will also help the SME to retrieve and cover the pre-establishment costs.

Further to support SMEs in the Sultanate, the State Council and the Majlis Al Shura have discussed during their meeting which was held on 5 May 2015 the possibility of issuing a special law to regulate SMEs, to be issued in 2016. The law is designed to support and develop the SME sector in Oman.