ROYAL DECREE NO.
102/94
Issuing the Foreign Capital Investment Law
We, Qaboos Bin Said, Sultan of Oman, having taken cognizance of
the Royal Decree No. 26/75 issuing the State Administrative
Apparatus Law and amendments thereto:
And the Commercial Companies Law No. 4/74 and amendments
thereto;
And the Royal Decree No. 4/74 issuing the Foreign Business and
Investment Law and amendments thereto;
And the Royal Decree No. 26/77 issuing the Law of Commercial
Agencies and amendments thereto:
And the Law for the Organization and Encouragement of the
Industry issued by virtue of the Royal Decree No. 1/79 and
amendments thereto;
And the Royal Decree No. 57/93 issuing the Regulations
Organising the GCC Investment.
And upon the exigencies of the public interest,
Decree as follows:
Article 1
The Foreign Capital Investment Law attached herewith shall be
applicable.
Article 2
The investment projects existing at the time of the issue of this Law
shall continue up to the end of the licence period thereof during
which time the percentage of foreign participation may be
amended as per the articles of the Law attached herewith.
The period of exemption from the income tax granted in
accordance with the Foreign Business and Investment Law issued
by the Royal Decree No. 4/74 referred to above shall be considered
as part of the exemption period set out in this law.
Article 3
The Minister of Commerce and Industry shall issue the regulations
necessary to the enforcement of this law.
Article 4
The Foreign Business and Investment Law issued by the Royal
Decree No. 4/74 referred to above shall be hereby abrogated.
Article 5
This decree shall be published in the official Gazette and shall
come into force as of date of publication.
QABOOS BIN SAID,
SULTAN OF OMAN
Issued On : 11th Jumada 1, 1415 AH
16th October, 1994 AD
FOREIGN CAPITAL INVESTMENT LAW
Article 1
Without prejudice to the provisions of the Royal Decree No. 57/93,
non-Omanis – whether natural of juridical persons – shall not
conduct any commercial, industrial or tourism businesses or
otherwise participate in an Omani Company except with a licence
from the Ministry of Commerce and Industry to be issued in
accordance with the Provisions of this Law.
Article 2
The licence referred to in the preceding Article shall be granted
after the following conditions have been met:
One) The business shall be conducted by an Omani Company with
a capital of not less than RO 150,000/- and the foreign share
therein shall not exceed 49% of the total capital.
However, the above percentage may be increased up to 65% of
the Company’s capital by a decision from the Minister of
Commerce and Industry following a recommendation from the
Foreign Capital Investment Committee.
The percentage referred to in the above paragraph may be
further increased up to 100% of the Company’s capital for the
projects which contribute to the development of the national
economy upon the approval of the Development Council
following a recommendation from the Minister of Commerce
and Industry, provided that the project’s capital shall not be less
than RO 500,000/-.
Two) When an existing joint Company participates in a new joint
venture Company, the foreign share shall be considered as the
total share in each Company provided that the Omani
percentage shall not be less than the percentage to be owned by
Omanis as set out in the foregoing paragraph.
Article 3
Exemptions from the conditions specified in the above Article for
obtaining the licence shall be granted to the following:
1. Companies which conduct business in the Sultanate of Oman by
virtue of special contracts or agreements with the Government
of the Sultanate or which are established by virtue of a Royal
Decree.
2. Parties conducting a business which is declared by the Cabinet
as necessary for the country.
Article 4
The application for foreign investment licence shall be referred to a
Committee to be formed at the Ministry and called “Foreign
Capital Investment Committee”. Such Committee shall be set up
by virtue of a decision from the Minister of Commerce and
Industry.
Article 5
The said Committee shall be responsible for giving opinions on the
investment applications with a foreign share of more than 49% and
shall make recommendations in respect of the following:
1. The identification of the investment fields.
2. The extent to which the project can be considered as one of the
economic development projects.
3. To prioritize the projects submitted for licensing so that
preference shall be given to the projects using local products
and raw materials which help maximise the value added thereof,
to the export oriented industries, and to the industries
introducing new products or using modern technology.
Preference shall also be given to the projects that attract and
localize internationally reputed industries. In the field of
tourism, preference shall be given to projects involving the
construction of integrated tourist villages and zones.
4. To look into the complaints and conflicts arising from the
application of this Law.
5. Other matters related to investment referred to it by the
Minister of Commerce and Industry.
The Committee shall issue its recommendations thereof by
absolute majority of members and submit them to the Minister
for decision. The applicant shall be notified of the decision
within a period not exceeding two weeks.
Article 6
Any applicant whose application has been rejected shall have the
right to appeal to the Minister within 30 days from the date of his
notification of the rejection. The decision of the Minister in this
respect shall be final.
Article 7
Licensing shall be granted to the projects subject to this Law
without the need for obtaining prior approvals from any
authorities outside the Ministry. However, due regard shall be
given to the negative lists issued by such authorities before
granting licence to any Company. The concerned Ministry may
review the environment, health, safety and other standards during
the construction and operation stages.
Article 8.1
Companies licensed to be incorporated pursuant to this Law and
carrying out its major activity in one of the following areas shall be
exempted from income tax:
One) Industry and Mining.
Two) Export of locally manufactured or processed products.
Three) Tourism promotion including operation of hotels and
tourist villages, but excluding management contracts.
Four) Production and processing of farm products including
poultry farming, processing or manufacturing animal products
and Agro-industries.
Five) Fishing and fish processing.
Six) Exploitation and provision of services such as public utility
projects, but excluding management contracts and project
execution contracting.
Article 8.2
Tax exemption shall be for a period of 5 years starting the date of
commencing production or carrying out the activity, as the case
may be. This period can be renewed in necessary cases, for a
period not exceeding 5 years. However, a decision shall be issued
by the Financial Affairs and Energy Resources Council for such
renewals.
Article 8.3
The Minister Supervising the Finance Ministry shall lay down
necessary controls and procedures to apply tax exemption and its
renewal pursuant to provisions of paragraphs 8.1 and 8.2 of this
Article.
Article 8.4
Companies carrying out their major activities in one of the areas
prescribed in paragraph 8.1 above shall have the right to transfer
or deduct the net loss incurred during the mandatory exemption
years, to any number of tax years till they are finally settled, as an
exemption to the provision of Article (14) of the above-referred
Law of Income Tax on Companies.
Article 9.1
Foreign Investment projects mentioned in this Law can be
exempted from (paying) custom duties on plant and machinery
imported by them for setting up the projects. They can also be
exempted from (paying) custom duties on raw material needed in
the manufacturing process which are not available in the local
markets, for a period of not exceeding 5 years starting from the
date of commencing production. This exemption can be renewed
once.
Article 9.2
Exemptions prescribed in the above paragraph shall apply on new
expansions (carried out) in the foreign investment projects,
starting from the date of issuing the licence for such expansions or
from the date of commencing production or carrying out the
activity, at such expansions, as the case may be.
What is meant by ‘expansion’ is increase in capital which shall be
used for adding new fixed capital assets for achieving increased
production capacity for the project or with the intention of
manufacturing a new product or extending a new activity or a
service.
Article 9.3
The Minister Supervising the Ministry of Finance shall lay down
the necessary controls and procedures to apply the custom duty
exemption and its renewal pursuant to the provisions of this law.
Article 10
The land needed for investment projects may be allocated by
usufruct or through rent for a long period.
Article 11
The investors in the investment projects shall be free to conduct
the licensed economic activity and to transfer abroad the imported
capital along with the profits accrued from the project.
Article 12
The said projects may not be confiscated or expropriated unless for
the public interest and against equitable compensation.
Article 13
The above referred projects can import by themselves or through
others, production accessories, material, machinery, spare parts
and appropriate means of transport, without the need to register
themselves in the register of importers. The concerned Ministry
shall determine the projects’ requirements of above mentioned
items based on their request.
Article 14
It may be agreed to refer any dispute between the foreign
investment projects and third parties to a local or international
arbitration tribunal.
Article 15
The provisions of the Commercial Companies Law shall be
applicable to the above said joint companies unless otherwise
specifically stated in this Law.
Article 16
The Company violating any provision of this Law shall be notified
to rectify such violation within a period not exceeding one month
from the notification date. The Minister may thereafter, upon a
recommendation from the Foreign Capital Investment Committee,
withdraw the licence of the violating Company.
Article 17
Without prejudice to any penalty stated in other laws, any
foreigner conducting any business referred to in this Law without
licence shall be fined no less than RO 5,000/- and no more than
RO 10,000/-. Likewise, any Omani participating with a foreigner
in such business without obtaining the required licence shall be
fined no less than RO 1,000/- and no more than RO 5,000/-.
