Investment country factsheet · Middle East / Gulf
Legal & tax framework for investment — 2026 edition
Series: UGGC Africa country factsheets — country-by-country guidance for investing in North Africa and the Gulf.
The Sultanate of Oman stands apart from the rest of the Gulf on two fronts. First, a macroeconomic trajectory running against the grain: while Qatar, Kuwait and Saudi Arabia saw their 2026 growth forecasts revised downward after the closure of the Strait of Hormuz, Oman’s was revised upward by the International Monetary Fund, and its public debt continues on a downward path. Second, a genuine tax break with the past: Oman becomes, through a text already enacted rather than a mere draft, the first Gulf State to introduce a personal income tax, effective 2028. Three points shape any establishment: the tax regime, still moderate at corporate level but about to change for individuals; the opening of share capital, wide but bounded by a 123-activity negative list; and a two-tier institutional architecture — IFCO, a genuine common law court system, and OAC, a classic arbitration centre, never to be confused.
Oman at a glance
The 2026 budget assumes a 1.3% of GDP deficit on a conservative USD 60 per barrel assumption; the International Monetary Fund, based on actual prices, anticipates a surplus — first-quarter execution, near balance, confirms a trajectory markedly better than the budgeted scenario without guaranteeing the announced surplus. Hydrocarbons account for around 30% of gross domestic product, not the 50% sometimes cited, a figure inherited from 2010-2013.
A national law, with no uniform regional legal space
- No OHADA, and no equivalent. Company law is governed by the Commercial Companies Law, Royal Decree No. 18/2019; foreign investment, by Royal Decree No. 50/2019; taxation, by the 2009 Income Tax Law. No regional uniform act and no supranational court applies on top of them.
- A fully overhauled zones regime in 2025. Royal Decree No. 38/2025, in force since 14 April 2025, repeals the two earlier texts on free zones and the Duqm special economic zone and sets a unified framework: corporate income tax exemption for 10 years, renewable twice — a conditional cap of 30 years — for activities “of a particular nature”, 100% foreign ownership, VAT not applicable within the zone. ⚠️ Exemption periods per zone published in pre-2025 guides are outdated; operators already established retain their acquired rights.
- A real estate reform benefiting the zones. The principle remains a prohibition on ownership by non-Omanis, except in Integrated Tourism Complexes; the 2025 decree now also opens it within special economic zones and free zones.
IFCO and OAC: a common law court system, and an arbitration centre — never to be confused
| IFCO — International Financial Centre of Oman | OAC — Oman Commercial Arbitration Centre | |
|---|---|---|
| Nature | Financial hub with a complete common law court system | Arbitration and mediation institution, attached to the Chamber of Commerce and Industry |
| Legal basis | Royal Decree No. 8/2026, in force since 13 January 2026 | Royal Decree No. 26/2018; rules in force since 6 December 2020 |
| Courts | Court of first instance, court of appeal (final decisions) and a dispute resolution tribunal — a genuine judicial system | No court of its own: administers arbitration and mediation proceedings between consenting parties |
| Language and applicable law | Common law entirely in English, administrative, financial and legislative autonomy | Omani law, arbitration law closely modelled on UNCITRAL |
| Attached incentives | Preferential tax regime for up to 50 years | Not applicable — OAC grants no tax incentive |
Corporate forms and usual structuring
| Form | Regime | Typical use |
|---|---|---|
| LLC | No statutory minimum capital — the ministry requires capital “sufficient” to cover around 12 months of working capital. Two shareholders minimum. | The most common form: trade, distribution, services |
| SPC — single person company | Same characteristics as the LLC, single shareholder. | Wholly owned subsidiary, project vehicle |
| SAOC — closed joint stock company | Minimum capital of OMR 500,000 (≈ USD 1.3 m), three shareholders minimum. | Larger projects, joint ventures |
| SAOG — public joint stock company | Minimum capital of OMR 2,000,000 (≈ USD 5.2 m) for incorporation from scratch. | Fundraising, listing |
| Branch | Wholly owned by the parent company, no separate legal personality. | Performance of a contract, presence without a subsidiary |
Tax regime — the essentials
| Tax | Rate | Detail |
|---|---|---|
| Corporate income tax | 15% | Standard rate, Royal Decree No. 28/2009. |
| SME regime | 3% | Omani companies meeting cumulative conditions: capital ≤ OMR 60,000, revenue ≤ OMR 150,000, ≤ 25 employees. Excludes air and maritime transport, extraction, banking, insurance, financial services and public utility concessions. |
| Petroleum sector | 55% | In practice set case by case under each production sharing agreement. |
| Personal income tax | 🔑 5% | On the share exceeding OMR 42,000/year. Royal Decree No. 56/2025 — enacted text, published in the Official Gazette on 30/06/2025. Effective 1 January 2028. Applies to tax residents (Omani and expatriates) on their worldwide income; non-residents taxed only on Oman-source income. First GCC state to adopt it — around 99% of the population unaffected. |
| Value added tax | 5% | Since 16 April 2021. An intermediate position in the Gulf: Qatar 0%, Oman and the UAE 5%, Bahrain 10%, Saudi Arabia 15%. |
| Withholding tax — dividends and interest | 0% | Suspended by royal directive of 11 January 2023 for non-resident investors. |
| Withholding tax — royalties and services | 10% | Applies to services and management fees, whether the service is rendered in Oman or abroad. |
| Global minimum tax | 🔑 Transposed, scope to confirm | Royal Decree No. 70/2024 (31/12/2024), fiscal years from 1 January 2025, groups ≥ EUR 750 m. Sources diverge on whether a genuine domestic top-up tax has been introduced alongside the income inclusion rule, which is transposed. To be checked case by case depending on group structure. |
| Stamp duty | None | Not applicable in Oman. |
| Social insurance — Omanis | 22.5% | 8% employee + 14.5% employer. No contribution for non-Omani employees. |
| Customs duties | 5% CIF | Goods from outside the Gulf Cooperation Council. |
Tax sources: PwC Worldwide Tax Summaries — Oman; Oman Tax Authority; EY; KPMG.
Foreign investment
- The principle. Royal Decree No. 50/2019 on foreign capital investment removed the requirement for an Omani partner and the minimum capital previously attached to it: 100% ownership is now possible in the large majority of activities, including outside special economic zones.
- A recently widened negative list. Ministerial Decision No. 435/2024 added 28 activities to the earlier list, bringing the total to 123 activities reserved to nationals — among them, by way of illustration, traditional handicrafts, vehicle repair, retail fuel sales and drinking water transport. ⚠️ The exhaustive list is not published in open access; it should be checked with the Ministry of Commerce, Industry and Investment Promotion (MOCIIP), via the Invest Easy platform.
- Omanisation — the gap between the rule and the ground. Sourced quotas reach 60% in banking and finance and 20% in retail; compliance now conditions access to public procurement, with a deadline of 31 May 2026. In practice, Omanis represent less than 14% of private-sector headcount — a considerable gap fuelling current regulatory pressure.
- Residency by investment. Ten years for an investment of at least OMR 500,000, five years from OMR 250,000.
Foreign exchange regulations
- A rial pegged to the dollar since 1986. The parity is set at OMR 1 = USD 2.6008, unchanged since the last parity change in 1986 — one of the most explicit statements across the series, the Central Bank of Oman itself describing it as unchanged.
- Convertibility and repatriation. The rial is fully convertible, and there is no restriction on the repatriation of capital from Oman.
- Good practice. Document the origin and destination of flows from the moment the account is opened: freedom of exchange does not exempt from the banking compliance checks usual in the region.
Regulations are liable to change — arrangements to be confirmed with the Central Bank of Oman and an authorised bank.
Attractive sectors
- Duqm special economic zone. Ten agreements or memoranda signed in 2026 worth around USD 1.5 billion — green hydrogen, EV battery anode production, gas liquids — and the OQ8 refinery fully operational since 2025, with a capacity of 255,000 barrels per day.
- Port logistics. Salalah port handled 4.3 million twenty-foot equivalent units in 2025, up from 3.3 million in 2024, with an expansion taking capacity to 6.5 million.
- Mining. Mineral sales up 30% in 2025, copper exports up nearly 400%.
- Green hydrogen. A national target of one million tonnes per year by 2030, driven by operator Hydrom. ⚠️ A major player, BP, withdrew from a 1.5-gigawatt project in Duqm in December 2025: no final investment decision is confirmed to date on this segment, a point to treat factually.
- Sovereign wealth fund. The Oman Investment Authority reported around USD 60 billion in assets at end-2025, up 13%.
Securing the investment — the UGGC angle
In Oman, the difficulty does not come from a hostile framework — it is among the most open in the Gulf — but from three developments to anticipate rather than discover after the fact.
- The 2028 income tax should be planned for today — for highly paid expatriate executives, structuring compensation packages must factor in this horizon.
- IFCO and OAC are not interchangeable — one is a complete court system, the other an arbitration centre; the choice determines the very nature of future disputes.
- Stated and actual Omanisation diverge sharply — compliance with sector quotas is becoming a condition for public procurement access, independent of the actual rate observed on the ground.
Our teams advise on these transactions in mergers & acquisitions, tax law and litigation & arbitration.
Our reading — a practitioner’s view
The figures do not tell the whole story. These are the points we draw to our clients’ attention before any establishment in Oman.
IFCO or OAC: the choice depends on the nature of dispute sought
A structured financing transaction, a securities issuance or a deal anchored to an international financial hub finds in IFCO a framework unprecedented in the Gulf: common law in English, courts of its own from first instance to appeal, a predictability approaching that of the financial centres of Dubai or Qatar. An ordinary commercial contract — distribution, services, construction — instead falls under general Omani law, with OAC as an arbitration option should the parties choose it. Confusing the two at the drafting stage means giving up, depending on the case, either a specialised court system or the flexibility of a classic arbitration clause.
Three points investors underestimate
- The 2028 income tax concerns residents’ worldwide income, not just their Omani income. An expatriate executive who became an Omani tax resident — presence exceeding 183 days — would, from 2028, see their worldwide income enter the tax base beyond OMR 42,000 per year. This is a change in kind, not degree, relative to personal taxation in the Gulf as known today: structuring international remuneration and mobility schemes must factor in this horizon from the recruitment stage, not as 2028 approaches.
- The special economic zones regime changed in 2025 — the old exemption periods no longer apply to new entrants. Royal Decree No. 38/2025 replaced the entire previous framework with a 10-year exemption renewable twice, a conditional cap of 30 years. An investor relying on commercial documentation predating 2025, citing different periods per zone, risks basing a financial model on a repealed regime.
- The exact scope of the global minimum tax remains to be checked case by case. Sources diverge on whether a genuine domestic top-up tax has been introduced alongside the income inclusion rule — a point we recommend settling through the tax structure of the group concerned rather than generalising from a single source.
From the text to practice
Two points call for a case-by-case check. First, the treatment of interest in the enforcement of arbitral awards: unlike Saudi Arabia, no reliable source to date documents a principle of unenforceability of interest in Oman — we recommend not transposing Saudi practice by analogy, absent identified case law, and addressing the question through an explicit choice-of-law clause. Second, the implementing regulation for the income tax, expected within twelve months of the publication of Royal Decree No. 56/2025, around late June 2026: its actual publication should be verified before any definitive communication to affected staff, particularly regarding calculation methods per income category.
Frequently asked questions
Is Oman really introducing a personal income tax?
Yes, and this is not a draft but an enacted text: Royal Decree No. 56/2025, signed on 22 June 2025 and published in the Official Gazette on 30 June 2025, introduces a personal income tax at a rate of 5% on taxable income exceeding OMR 42,000 per year, around USD 109,000. It will take effect on 1 January 2028 and will apply to tax residents, Omani nationals and expatriates alike, on their worldwide income, residence being defined as presence exceeding 183 days. Oman thereby becomes the first Gulf Cooperation Council state to adopt a personal income tax. According to the Oman Tax Authority itself, approximately 99% of the population will not be affected by this threshold.
What is the corporate income tax rate in Oman?
The standard rate is 15%. A reduced rate of 3% applies to Omani small and medium-sized enterprises meeting cumulative conditions: capital not exceeding OMR 60,000, revenue not exceeding OMR 150,000, and no more than 25 employees, excluding air and maritime transport, extraction, banking, insurance, financial services and public utility concessions. Petroleum operations are subject to a separate rate, generally set at 55%, determined case by case under each exploration and production sharing agreement.
Can a foreign investor own 100% of a company in Oman?
Yes, in the large majority of activities, even outside special economic zones. Royal Decree No. 50/2019 on foreign capital investment removed the requirement for an Omani partner and the minimum capital previously attached to it. 100% ownership remains excluded for 123 activities reserved to nationals, a negative list brought to that total by Ministerial Decision No. 435/2024, which added 28 activities to the earlier text — among them, by way of illustration only, traditional handicrafts, vehicle repair, retail fuel sales and drinking water transport, the full list not being published in open access.
What is IFCO, and how does it differ from the OAC arbitration centre?
The International Financial Centre of Oman (IFCO), created by Royal Decree No. 8/2026 and in force since 13 January 2026, is a financial hub at Madinat Al Irfan with its own common law drafted entirely in English and genuine courts of its own: a court of first instance, a court of appeal issuing final decisions, and a dispute resolution tribunal. It is a complete court system, distinct from Omani civil law. The Oman Commercial Arbitration Centre (OAC), created by Royal Decree No. 26/2018, is an arbitration and mediation institution attached to the Chamber of Commerce and Industry: it is not a court, and should not be confused with IFCO.
Was Oman affected by the Gulf’s 2026 economic disruption?
No, and this is a regional singularity. Unlike Qatar, Kuwait and Saudi Arabia, whose 2026 growth forecasts were revised downward following the closure of the Strait of Hormuz in late February 2026, Oman’s was revised upward by the International Monetary Fund, from 3.5% in April to around 3.7% at its June mission. Public debt continues its downward trajectory, at 34.7% of gross domestic product at end-2025, and first-quarter 2026 budget execution came in markedly better than planned.
Considering an establishment in Oman?
Contact the UGGC Africa team · Download the country factsheet (PDF)
Disclaimer. This country factsheet is provided for general information purposes, as at September 2026; it does not constitute legal or tax advice and cannot bind UGGC Africa. Tax rates, special economic zone regimes and foreign ownership rules change rapidly in the Gulf and are liable to change. Any investment decision must be the subject of a tailored analysis.
Sources: Central Bank of Oman — exchange rate policy · Oman Tax Authority — Personal Income Tax Law · PwC Worldwide Tax Summaries — Oman · UNCITRAL — status of the New York Convention · Oman Ministry of Finance · International Monetary Fund · World Bank.