2 Sept 2019
OMAN: New Foreign Capital Investment Law Takes Effect in January 2020
Foreign investment restrictions in Oman will be relaxed from the start of 2020, following approval of a new law intended to boost investment in the sultanate. Overseas investors will no longer be required to have an Omani partner and shareholding limits will be removed. A new facility will also be introduced to facilitate foreign investment approvals.
The changes were announced by the Ministry of Commerce and Industry (MoCI) of the Sultanate of Oman, which confirmed that the new Foreign Capital Investment Law (FCIL) will come into force from 2 January 2020, replacing the earlier law issued in 1994.
The new FCIL was approved in a royal decree by Sultan Qaboos in July after more than four years in development, with assistance from the World Bank, and is intended to encourage more foreign investment in the country. An official version in Arabic is available here.
Among the key measures in the new law is the removal of the requirement for an Omani partner and shareholding caps on foreign ownership. Under the current law, foreign investors are limited to a maximum of 49% shareholding in a local commercial entity, except if established in one of the sultanate’s free zones; as an entity under the Gulf Cooperation Council (GCC); under a free trade agreement or treaty, ratified and in force in Oman; or some form of special government-approved project with a minimum capital of OMR500,000 (US$1.3 million).
The royal decree effectively cancels the old Foreign Investment Law, promulgated under Royal Decree 102/94, but all benefits, incentives and guarantees granted to foreign investment projects under that law will remain in place, and will continue until the current benefits expire. The new law will not be prejudicial to any other existing agreements in place for economic zones such as Duqm; GCC investment; free trade zones; or under any double taxation treaties.
The new law also provides for an Investment Services Centre to be established within the MoCI for the registration of foreign investors and to simplify procedures for obtaining the required approvals and licences. The MoCI will be responsible for issuing executive regulations for the new law within six months of its effective date. Until that time, the regulations under the existing law will continue to remain in force, as long they do not contradict any of the stipulations given in the new law.