How to Register a Sole Proprietorship (المؤسسة الفردية) in Oman

Oman has become an increasingly attractive place for establishing a sole proprietorship. The government has worked to simplify the registration process through online platforms, making it easier to reserve a trade name, apply for licenses, and keep registrations up to date.

One of Oman’s strongest advantages is its tax environment: business income is taxed at a standard rate of 15%, but many small enterprises qualify for a reduced 3% rate, and there is still no broad personal income tax for most individuals. Beginning in 2028, a modest 5% personal income tax will only apply to those earning above OMR 42,000 per year, but most freelancers and small business owners will remain unaffected.

This guide explains what a sole proprietorship is in Oman, how it compares to other business structures, and the exact steps you need to take to register one.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Oman?

In Oman, a sole proprietorship is officially called a Sole Establishment (المؤسسة الفردية). It is a business owned and operated by one person, with no legal distinction between the owner and the business. Other terms you may see include sole trader, self-employed worker, or independent contractor. These all refer to the same model: one person takes on the business risks, but also receives the profits.

How does a sole proprietorship (المؤسسة الفردية) work in Oman?

Sole Establishment (المؤسسة الفردية) vs. other business structures in Oman

There are alternatives to operating as a sole proprietorship in Oman, such as Limited Liability Companies (LLCs) or one-person companies. The table below compares the Sole Establishment model with those alternatives so you can see which structure might suit you best.

Step-by-step guide: how to register a sole proprietorship in Oman

Step 1: Check your eligibility

To form a Sole Establishment in Oman, you must usually be an Omani or Gulf Cooperation Council **(**GCC) national. Foreign nationals often face restrictions and may need to set up an LLC or obtain special approvals.

Step 2: Choose your business name

You must select and reserve a trade name through MOCIIP’s system. The name should not duplicate an existing one and must comply with Oman’s trade name rules. You can check name availability on the government portal.

Step 3: Gather required documents

Required documents typically include:

• National ID or passport (for Omani/GCC nationals) or residence permit if applicable
• Proof of business premises (e.g., lease contract)
• Trade name reservation certificate
• Business activity description
• Sector-specific permits, if required

Step 4: Register with the Ministry of Commerce, Industry & Investment Promotion

Apply for your trade license and commercial registration via MOCIIP’s business platform. Some activities may also require clearances from other bodies, such as the Royal Oman Police.

Step 5: Pay registration fees and contributions

Expect to pay for name reservation, license issuance, and annual renewal. For many Sole Establishments, you must also show OMR 3,000 in capital. Exact fees vary by activity and municipality.

Step 6: Complete post-registration obligations

Once your Sole Establishment is registered, you must meet ongoing obligations. This includes keeping proper financial records, filing annual business income tax returns, and registering for VAT if your turnover exceeds the legal threshold. From 2028, you must also check whether your personal income exceeds OMR 42,000, which would trigger the new 5% personal income tax. Annual trade license renewals are mandatory, and you must report any changes in business activity, ownership, or address. If you hire staff, you must comply with Oman’s labor law, obtain work permits for expatriates, and fulfill any social security requirements.

Financial and tax obligations for sole proprietors in Oman

You are responsible for:

• Corporate income tax: Sole Establishments (المؤسسة الفردية) are treated as taxable entities under Oman’s corporate income tax law. Profits are typically taxed at 15%. A reduced rate of 3% applies if the business qualifies as an SME—meaning registered capital of OMR 60,000 or less, annual gross income of OMR 150,000 or less, no more than 25 employees, and the activity is not an occupational activity (such as legal, medical, or engineering services). Returns are filed annually with the Oman Tax Authority through its online Taxpayer Portal.
• Personal income tax: Oman currently does not levy general personal income tax. However, from 1 January 2028, a 5% tax will apply to individuals earning more than OMR 42,000 per year. This will affect sole proprietors whose net personal income crosses that threshold.
• VAT: The standard VAT rate is 5%. Registration is mandatory if your annual taxable supplies exceed the registration threshold. Returns are usually filed quarterly through the Oman Tax Authority’s e-portal.
• Social security contributions: If you hire Omani employees, you must register them with the Public Authority for Social Insurance and make monthly contributions of their gross salary (with additional percentages covered by the employer). For expatriate employees, you must comply with visa and work permit requirements, but there are no mandatory social security contributions for them. Sole proprietors are not generally required to contribute for themselves unless they employ staff.
• Record-keeping: You must keep accurate accounts of all business transactions, including invoices, receipts, and contracts. Records should be retained for at least 10 years, as the Tax Authority can request access during audits.
• Invoicing: Invoices must include your commercial registration number, business name and address, client details, date, description of goods or services, and any applicable VAT. All invoices must be sequentially numbered and stored for your records.

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FAQs

What is the minimum capital required to start a Sole Establishment (المؤسسة الفردية) in Oman?
Usually OMR 3,000, although this can vary depending on activity.

Do Sole Establishments (المؤسسة الفردية) need to register for VAT?
Yes, if taxable supplies exceed Oman’s VAT threshold.

Will I need to pay personal income tax as a Sole Establishment (المؤسسة الفردية)?
Not until 2028, and only if your annual income exceeds OMR 42,000. In that case, you will pay 5% on the amount over the threshold.

How much are the standard contributions and fees?
Costs include trade license fees, registration fees, annual renewals, and possible municipal charges. These vary depending on the activity and location.

Can a Sole Establishment (المؤسسة الفردية) hire employees?
Yes, provided you comply with labor law, obtain necessary visas, and meet Omanisation requirements.

How long does it take to register?
Usually, within a few days to two weeks if the documents are in order.

Can foreign nationals register a Sole Establishment (المؤسسة الفردية)?
Generally, no, unless they are GCC nationals or have special approvals. Most foreign investors must form an LLC.

Do Sole Establishments (المؤسسة الفردية) need a separate bank account?
Not legally required, but strongly recommended for financial clarity.

What happens if I stop operating?
You must cancel your trade license with MOCIIP, file final tax returns, and settle obligations before closing.

Are there incentives for new Sole Establishments (المؤسسة الفردية)?
Yes. SMEs may qualify for the reduced 3% income tax rate.

Can I use Deel to get paid as a Sole Establishment (المؤسسة الفردية)?
Yes. Deel supports freelancers and sole proprietors with global payments, compliant invoices, and contracts.