Monday, May 22, 2017

Oman Free Zones or Oman Onshore: Where Best to Operate?

Establishing an entity in a free zone area offshore Oman – as opposed to establishing it onshore Oman – has its many advantages and privileges.  These include: 100% foreign ownership, no minimum capital requirements, no custom duties, and a strategic location on the international trade route, among others. In addition, all free zones in Oman offer a single window (one-stop shop) through which licenses, permits and approvals can be obtained in an effort to streamline procedures required to set up entities within them.  The authority to set up such a one-stop shop has been accorded to free zones via Royal Decrees.  For example, Article (13) of Royal Decree 79/2013 – Issuing the Regulation for the Special Economic Zone at Duqm – states that the free zone authority shall have the functions of the General Secretariat of the Commercial Register at the Ministry of Commerce and Industry regarding the registration of projects,  meaning that the free zone authority will be able to issue approved commercial registration documents to set up entities in the zone.

The procedures required in order to set up an entity in a free zone area differ from those required to set up an entity in onshore Oman.

In order to set up an entity in onshore Oman, the party aiming to establish the entity must complete the following steps:

  • Step 1 – Set up a bank deposit of the required capital;
  • Step 2 – Register the entity commercially via the Ministry of Commerce and Industry’s one-stop shop; submit an application form with the necessary documents and pay the necessary fees;
  • Step 3 – Obtain licenses and permits required from the relevant ministries and authorities, which will depend on the nature of the business being established; and
  • Step 4 – Obtain a permit from the Muscat Municipality; this step entails submitting all the approved applications from other relevant ministries and authorities, and paying the required fees.
In order to set up an entity in a free zone offshore Oman, the party aiming to establish the entity must complete the following steps:
  • Step 1 – Submit a plot application form along with other necessary application forms to the designated one-stop shop at the free zone;
  • Step 2 – Obtain the internal approval of the free zone and be allocated a plot; this step entails obtaining a letter of “no objection” from the free zone, completion of a due diligence report on the entity being established, the selection of a plot and the payment of the required fee amount; and
  • Step 3 – Sign the land lease agreement.
The application forms required to set up the entity in the free zone depend on the nature of the entity being established. The following table highlights the required forms depending on whether the entity being established will be a limited liability company or a branch of an existing company:


Limited Liability Company
Branch of an Existing Company
1
Copy of current Certificate of Registration of the company or Certificate of Good Standing
Copy of the Certificate of Incorporation or Certificate of Good Standing of the parent company
2
Copy of the Memorandum and Articles of Association
Copy of the Memorandum and Articles of Association of the parent company
3
Original board resolution specifying establishment at the free zone area and appointment of manager along with a copy of his passport and specimen of signature
Original board resolution stating the setting up of a branch at the free zone area and appointment of a manager for the branch along with a specimen of his signature and a copy of his/her passport

All of the above documents are to be notarised by a notary public in the country of its origin and attested and consularised up to the Omani Embassy situated therein.