Incentives for foreign projects in less developed areas

MUSCAT: The Foreign Capital Investment Law offers many benefits for investors including tax incentives for their projects to be set up in the less developed governorates in the Sultanate.

According to the law, the executive regulations of which were issued by Dr Ali bin Masoud al Sunaidy, Minister of Commerce and Industry, the projects can get several benefits like tax exemptions and exclusion from the Omanisation policy for a period of time.

While explaining about the policy, Mohammed bin Rashid al Badi, acting director of the legal department of the ministry, said that projects being set up in less developed governorates of the Sultanate can avail many benefits.

These include exemptions from the rental value or return of the right to use the lands and real estate necessary for the investment project for a period not exceeding five years.

“They will also be excluded from the Omanisation policy for a period of two years from the date of the actual operation of the project”, he said.

According to him, these projects can be exempted from all duties or some of them.

“The Council of Ministers can give other benefits to the investment project provided they depend on foreign money remitted from abroad according to the rules made by the Central Bank of Oman, in coordination with the competent authorities”, he said.

For this purpose, Al Badi said, it is necessary that the products of the project are not less than 40 per cent Omani if any.

“The project would export not less than 30 per cent of its production outside the Sultanate. It also must help in the transfer of expertise, modern technology, and knowledge to the Sultanate”, he said.

According to Al Badi, it is also permissible to exempt investment projects from some of the prescribed customs and non-customs duties and fees, without prejudice to the provisions of the Common Customs Law for the states of the Gulf Cooperation Council (GCC).

“The exemption will come into effect from the date of the actual operation of the project, provided the import of the machines or equipment, production materials, or other imported materials are necessary for the purposes of the project and consistent with its nature”, he said.

The period of exemptions from customs and non-customs duties and fees will be determined separately for each activity.

All this from the date the investment project starts to produce or provide services.

“The institution or the company, established by the foreign investor and who were exempted from the duties, must submit tax returns according to the dates and procedures stipulated by law”, he said.