THE FOREIGN CAPITAL INVESTMENT LAWTHE LAW FOR THE ORGANIZATION AND ENCOURAGEMENTOF INDUSTRY

INTRODUCTION

It gives Oman Chamber of Commerce and Industry pleasure topublish this booklet in Arabic and English. It contains the text ofthe Royal Decree No. 102/94 issuing the Foreign CapitalInvestment Law, the Royal Decree No. 1/79 promulgating the Lawfor the Organization and Encouragement of Industry of 1978 andthe amendments thereto, the Instructions for establishing ofOmani Companies subject to Commercial Companies Law and theInvestment Law and the incentives and support provided toindustry by the Ministry of Commerce and Industry. By issuingthis booklet the Chamber confirms its role in supporting anddeveloping international commercial relations with the Sultanate.It provides the opportunity to all those who deal with the Omanimarket to be acquainted with the laws that govern and organise it.The knowledge of the laws is the first step towards success for allthose who are looking forward to establishing successful economicand commercial projects.

The English translation is provided on the basis that it is anunofficial translation. The Chamber accepts no liability for theaccuracy of translations. The Arabic text as published in theofficial Gazette is the authentic text.

With best wishes for all business community.

OMAN CHAMBER OF COMMERCE AND INDUSTRY

Fourth EditionMuscat, May 1998

ROYAL DECREE NO. 102/94Issuing the Foreign Capital Investment Law

We, Qaboos Bin Said, Sultan of Oman, having taken cognizance ofthe Royal Decree No. 26/75 issuing the State AdministrativeApparatus Law and amendments thereto:

And the Commercial Companies Law No. 4/74 and amendmentsthereto;

And the Royal Decree No. 4/74 issuing the Foreign Business andInvestment Law and amendments thereto;

And the Royal Decree No. 26/77 issuing the Law of CommercialAgencies and amendments thereto:

And the Law for the Organization and Encouragement of theIndustry issued by virtue of the Royal Decree No. 1/79 andamendments thereto;

And the Royal Decree No. 57/93 issuing the RegulationsOrganising the GCC Investment.

And upon the exigencies of the public interest,

Decree as follows:

Article 1The Foreign Capital Investment Law attached herewith shall beapplicable.

Article 2The investment projects existing at the time of the issue of this Lawshall continue up to the end of the licence period thereof duringwhich time the percentage of foreign participation may beamended as per the articles of the Law attached herewith.

The period of exemption from the income tax granted inaccordance with the Foreign Business and Investment Law issuedby the Royal Decree No. 4/74 referred to above shall be consideredas part of the exemption period set out in this law.

Article 3The Minister of Commerce and Industry shall issue the regulationsnecessary to the enforcement of this law.

Article 4The Foreign Business and Investment Law issued by the RoyalDecree No. 4/74 referred to above shall be hereby abrogated.

Article 5This decree shall be published in the official Gazette and shallcome 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 1Without prejudice to the provisions of the Royal Decree No. 57/93,non-Omanis – whether natural of juridical persons – shall notconduct any commercial, industrial or tourism businesses orotherwise participate in an Omani Company except with a licencefrom the Ministry of Commerce and Industry to be issued inaccordance with the Provisions of this Law.

Article 2The licence referred to in the preceding Article shall be grantedafter the following conditions have been met:

One) The business shall be conducted by an Omani Company witha capital of not less than RO 150,000/- and the foreign sharetherein shall not exceed 49% of the total capital.

However, the above percentage may be increased up to 65% ofthe Company’s capital by a decision from the Minister ofCommerce and Industry following a recommendation from theForeign Capital Investment Committee.

The percentage referred to in the above paragraph may befurther increased up to 100% of the Company’s capital for theprojects which contribute to the development of the nationaleconomy upon the approval of the Development Councilfollowing a recommendation from the Minister of Commerceand Industry, provided that the project’s capital shall not be lessthan RO 500,000/-.

Two) When an existing joint Company participates in a new jointventure Company, the foreign share shall be considered as thetotal share in each Company provided that the Omanipercentage shall not be less than the percentage to be owned byOmanis as set out in the foregoing paragraph.

Article 3Exemptions from the conditions specified in the above Article forobtaining the licence shall be granted to the following:

1. Companies which conduct business in the Sultanate of Oman byvirtue of special contracts or agreements with the Government

of the Sultanate or which are established by virtue of a RoyalDecree.

2. Parties conducting a business which is declared by the Cabinetas necessary for the country.

Article 4The application for foreign investment licence shall be referred to aCommittee to be formed at the Ministry and called “ForeignCapital Investment Committee”. Such Committee shall be set upby virtue of a decision from the Minister of Commerce andIndustry.

Article 5The said Committee shall be responsible for giving opinions on theinvestment applications with a foreign share of more than 49% andshall 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 theeconomic development projects.

3. To prioritize the projects submitted for licensing so thatpreference shall be given to the projects using local productsand raw materials which help maximise the value added thereof,to the export oriented industries, and to the industriesintroducing new products or using modern technology.Preference shall also be given to the projects that attract andlocalize internationally reputed industries. In the field oftourism, preference shall be given to projects involving theconstruction of integrated tourist villages and zones.

4. To look into the complaints and conflicts arising from theapplication of this Law.

5. Other matters related to investment referred to it by theMinister of Commerce and Industry.

The Committee shall issue its recommendations thereof byabsolute majority of members and submit them to the Ministerfor decision. The applicant shall be notified of the decisionwithin a period not exceeding two weeks.

Article 6Any applicant whose application has been rejected shall have theright to appeal to the Minister within 30 days from the date of hisnotification of the rejection. The decision of the Minister in thisrespect shall be final.Article 7Licensing shall be granted to the projects subject to this Lawwithout the need for obtaining prior approvals from anyauthorities outside the Ministry. However, due regard shall begiven to the negative lists issued by such authorities beforegranting licence to any Company. The concerned Ministry mayreview the environment, health, safety and other standards duringthe construction and operation stages.

Article 8.1Companies licensed to be incorporated pursuant to this Law andcarrying out its major activity in one of the following areas shall beexempted from income tax:

One) Industry and Mining.

Two) Export of locally manufactured or processed products.

Three) Tourism promotion including operation of hotels andtourist villages, but excluding management contracts.

Four) Production and processing of farm products includingpoultry farming, processing or manufacturing animal productsand Agro-industries.

Five) Fishing and fish processing.

Six) Exploitation and provision of services such as public utilityprojects, but excluding management contracts and projectexecution contracting.

Article 8.2Tax exemption shall be for a period of 5 years starting the date ofcommencing production or carrying out the activity, as the casemay be. This period can be renewed in necessary cases, for aperiod not exceeding 5 years. However, a decision shall be issuedby the Financial Affairs and Energy Resources Council for suchrenewals.

Article 8.3The Minister Supervising the Finance Ministry shall lay downnecessary controls and procedures to apply tax exemption and itsrenewal pursuant to provisions of paragraphs 8.1 and 8.2 of thisArticle.

Article 8.4Companies carrying out their major activities in one of the areasprescribed in paragraph 8.1 above shall have the right to transferor deduct the net loss incurred during the mandatory exemptionyears, to any number of tax years till they are finally settled, as anexemption to the provision of Article (14) of the above-referredLaw of Income Tax on Companies.

Article 9.1Foreign Investment projects mentioned in this Law can beexempted from (paying) custom duties on plant and machineryimported by them for setting up the projects. They can also beexempted from (paying) custom duties on raw material needed inthe manufacturing process which are not available in the localmarkets, for a period of not exceeding 5 years starting from thedate of commencing production. This exemption can be renewedonce.

Article 9.2Exemptions prescribed in the above paragraph shall apply on newexpansions (carried out) in the foreign investment projects,starting from the date of issuing the licence for such expansions orfrom the date of commencing production or carrying out theactivity, at such expansions, as the case may be.

What is meant by ‘expansion’ is increase in capital which shall beused for adding new fixed capital assets for achieving increasedproduction capacity for the project or with the intention ofmanufacturing a new product or extending a new activity or aservice.

Article 9.3

The Minister Supervising the Ministry of Finance shall lay downthe necessary controls and procedures to apply the custom dutyexemption and its renewal pursuant to the provisions of this law.

Article 10The land needed for investment projects may be allocated byusufruct or through rent for a long period.

Article 11The investors in the investment projects shall be free to conductthe licensed economic activity and to transfer abroad the importedcapital along with the profits accrued from the project.

Article 12The said projects may not be confiscated or expropriated unless forthe public interest and against equitable compensation.

Article 13The above referred projects can import by themselves or throughothers, production accessories, material, machinery, spare partsand appropriate means of transport, without the need to registerthemselves in the register of importers. The concerned Ministryshall determine the projects’ requirements of above mentioneditems based on their request.

Article 14It may be agreed to refer any dispute between the foreigninvestment projects and third parties to a local or internationalarbitration tribunal.

Article 15The provisions of the Commercial Companies Law shall beapplicable to the above said joint companies unless otherwisespecifically stated in this Law.

Article 16The Company violating any provision of this Law shall be notifiedto rectify such violation within a period not exceeding one monthfrom the notification date. The Minister may thereafter, upon arecommendation from the Foreign Capital Investment Committee,withdraw the licence of the violating Company.

Article 17Without prejudice to any penalty stated in other laws, anyforeigner conducting any business referred to in this Law withoutlicence shall be fined no less than RO 5,000/- and no more thanRO 10,000/-. Likewise, any Omani participating with a foreignerin such business without obtaining the required licence shall befined no less than RO 1,000/- and no more than RO 5,000/-.

INSTRUCTION FOR ESTABLISHMENT OF OMANI COMPANIESSUBJECT TO COMMERCIAL COMPANIES LAW AND

FOREIGN BUSINESS AND INVESTMENT LAW

SULTANATE OF OMANMINISTRY OF COMMERCE AND INDUSTRYDIRECTORATE GENERAL OF COMMERCEDEPARTMENT OF COMPANIES AFFAIRS

It is requested that applicant for Licence to establish a Company asabove, should undergo the following procedures:

1. Submit an application duly signed by at least three founders incase of Joint Stock Companies, and by at least two members incase of other types of Companies.

2. Submit a certificate from the Commercial Registration statingthat no other Company is registered in Oman under the sameproposed commercial name.

3. Prepare the Articles of Association/Incorporation of theproposed Company, according to its legal type.

4. If a proposed partner is a juristic person, it is a must to submitits Articles of Association and Certificate of Registration andPower of Attorney to the authorised Managers. In case of anon-Omani juristic person, also a brochure of the Company’smajor projects and last balance sheet (if any) are preferred to besubmitted along with, duly attested (as well as the former) bythe concerned authorities in the country where the head officeof the Company is located and from the Embassy of Omanthere.

5. Capital of the proposed Company should not be less than RO150,000/-.

6. Omani proportion in the Capital and share of profit should notbe less than 35%. In case of citizens of AGCC States thispercentage is dropped to 25% of the capital.

7. Activities and objects of the proposed Company should belimited within one specific field. No foreign participation isallowed in General Trade and Service ventures.

8. The non-Omani partner other than citizens of AGCC States inthe proposed Company must be a Juristic Person (Company),having an experience of not less than 5 years in the same field ofthe activity required.

9. Written approvals must be obtained from the appropriategovernment departments concerned with the proposedactivities.

10. When the establishment of the Company is approved, thenecessary financial recommendations are to be forwarded andsteps for registering with the Commercial Registry are to betaken.

Any application incomplete in regard of the above, will not belooked into.

Director of Companies Affairs

THE LAW FOR THE ORGANISATION AND ENCOURAGEMENTOF INDUSTRY OF 1978

PROMULGATED BY ROYAL DECREE NO. 1/79And

THE AMENDMENTS THERETO OF ROYAL DECREE NO. 80/89

ROYAL DECREE 1/79

We, Qaboos Bin Said, Sultan of Oman, after reference to RoyalDecree No. 26/75 issuing the law governing the administrativeapparatus of the State and amendments thereto, to law 6/74protecting the developing industries, to Royal Decree No. 4/74issuing the Law for Foreign Trade and the Investment of ForeignCapital and amendments thereto, and to Royal Decree No. 17/75organizing the measures for industrialization and control ofindustrial installations as well as the Ministerial decisions for itsimplementation, have decreed the following in the public interest.

Article 1The provisions of the accompanying Law, called “The Law for theOrganization & Encouragement of Industry of 1978”, shall beapplied.

Article 2The Law for the Protection of Developing Industries No. 6/74 andall that is in conflict with the provisions of the attached law, suchas previously published laws and decrees, shall all be abrogated.

Article 3This decree shall be published in the official Gazette and shall takeeffect from the date of its publication.

QABOOS BIN SAID 4/1/1979Sultan of Oman

THE LAW FOR THE ORGANIZATION & ENCOURAGEMENT OFINDUSTRY OF 1978

CHAPTER ONEIndustrial Installations & their Purpose

Article 1An industrial establishment, for the purposes of this Law, meansany project the main purpose of which is to convert raw materialsinto fully- processed or half-processed products or to convert half-processed products into fully-processed products. This includesmixing, separation, moulding, assembling, packing and wrappingwhere such operations are carried out mostly by mechanicalmeans.

Article 2The provisions of this law shall apply to industrial installations,persons and bodies that own or run such installations in theSultanate of Oman.

Article 3A Committee shall be formed at the Ministry of Commerce andIndustry known as “The Committee for the Development ofIndustry” and shall comprise the following:

1. The Undersecretary, Ministry of Commerce and Industry –Chairman;

2. The Director General of Industry – Deputy Chairman;3. The Director General of Commerce – Member;4. The Director General of Specifications & Measurements –

Member;5. The Director General of Customs – Member;6. Executive Director, Rusayl Industrial Estate – Member;7. Chairman of the Industrial Committee, Oman Chamber of

Commerce and Industry – Member.

The Deputy Chairman shall act as the Chairman during the latter’sabsence and shall undertake other functions and responsibilities tobe assigned to him by the Committee.

The Committee may seek the assistance of any of the Government’stechnical staff or professional experts whom it deems helpful and

may invite them to Committee meetings, but they shall not haveany voting rights.

A Committee meeting may be called at the Chairman’s request, atleast once every three months. The Chairman may call aCommittee meeting as necessary.

Unless attended by at least five members including the Chairmanor Deputy Chairman the Committee meeting shall not be valid.

Resolutions of the Committee shall be passed by an absolutemajority of votes of members attending a meeting. When votes areequal the Chairman shall have the casting vote.

Article 4The Industrial Development Committee shall be concerned withthe development and consolidation of industrial installations in theSultanate and with the raising of the level of productivityefficiency, particularly in the following:

1. To prepare and study proposals and methods for thedevelopment of national industries by steps directed at theirprotection, organization and encouragement, and to create newindustries according to the framework of the development planas well as to put forward necessary recommendations in thisrespect.

2. To propose general policy regarding the organization of foreigninvestment in national industrial projects on the lines of the lawfor Foreign Trade and the Investment of Foreign Capitalreferred to above.

3. To lay down proposals regarding the drawing up of a generalpolicy for privileges, exemptions and facilities to be extended toindustrial projects and to define their order of priority andextent of utilization by each of them according to the economicneeds of the country and the circumstances for localconsumption and exportation, as well as observing theeconomic and social plan of the country.

4. To look into the complaints submitted by those concernedaccording to the provisions of this law.

5. To carry out studies and other business assigned to it by theMinister of Commerce and Industry.

CHAPTER TWOIndustrial License

Article 5It is not allowed for industrial installations to be set up or to causechanges to be made in their capacity, size, industrial purposes orlocations, unless an industrial license, issued by the DirectorateGeneral of Industry in the Ministry of Commerce and Industry, hasbeen obtained.

Article 6No industrial establishment, the total cost of which exceeds RO50,000/- and which carries out activities in essential industries,shall stop or reduce its production without obtaining priorpermission from the Directorate General of Industry.

The Minister of Commerce and Industry shall determine whichindustries are essential industries and thus subject to this article.

In all circumstances industrial establishments, whatsoever theirtotal capital, shall be subject to Decrees, Laws and Decisionsconcerning Municipalities, public health, town planning,conservation of environment and prevention of pollution etc.

Article 7Application for industrial license shall be submitted to the Ministryof Commerce and Industry accompanied by documents andinformation asked for by the Law and its implementing decisionsand regulations.

Article 8The grant or refusal of a license shall be by a decision from theDirectorate General of Industry within two months from the datethe application has been forwarded. In case of refusal, the decisionshall explain the reasons for that, and if no decision is issuedwithin the above period, the project is considered rejected, unlessthe Ministry of Commerce and Industry notifies the owner of theproject during the above period to furnish it with any other

information necessary for the issue of the license. The applicantconcerned may send a complaint against refusal decision to theCommittee referred to above in Article (2) of this Law.

Article 9All conditions according to which a license is granted, must beclearly shown in the license certificate, which shall include thefollowing conditions at least:

One) Industrial installation’s adherence, when in production, tothe specifications and measurements defined by the laws anddecisions already issued in this respect or in accordance withthose assigned to the licensee.

Two) The privileges, exemptions and facilities which are decided tobe granted to the industrial installation.

Three) To comply with the regulations laid down by anygovernment body for the purpose of safeguarding security, orpublic health, etc. or with any other building or planningrestrictions.

Article 10The Minister of Commerce and Industry has the right to cancel anyindustrial license or withdraw any privileges granted according tothis Law, in the following circumstances:

One) If it is proved that the owner of the installation has failed,without any reasonable excuses, to start construction oroperations or production, or to carry out the changes allowedwithin the period of time defined in the license. The Ministermay extend the defined period if a reasonable excuse for that issubmitted.

Two) If there is violation of any of the terms mentioned in theindustrial license or of the terms for granting privileges.

Three) If the owner of an industrial installation puts forwardinaccurate details which result in his being granted privileges ofexemptions of facilities according to this law. In all the

preceding cases, the Minister shall only withdraw some or all ofthe privileges granted without cancelling the industrial license.

In all cases, the applicant concerned can submit a complaintagainst the decision to the Council of Ministers within one monthfrom the date of his being notified.

Article 11The installation from which the license or any granted privilegeshave been withdrawn may apply anew, to obtain the license orrecover the privileges, provided its application for license satisfiesthe terms asked for. The new application shall not be submittedbefore the expiry of a period of six months on the decision ofcancellation or withdrawal referred to above.

Article 12The Minister of Commerce and Industry, by a decision from him,may forbid the setting up of certain industries, if the general policyof the Staterequires that.

CHAPTER THREEIndustrial Registration

Article 13The Directorate General of Industry shall establish a register forindustrial establishments to contain all relevant information abouteach establishment.

Every owner or Manager of an industrial establishment shall applyfor register within a period of two months from the date ofcommencement of commercial production. Registration ofcommercial establishments shall be renewed every five years fromthe date of registration and within one month before expiry of thefive-year period. The Minister of Commerce and Industry shalldetermine the registration renewal fees at not more than the fees ofthe original registration.

The provisions of the above paragraph shall apply to any existingestablishment which was registered five years ago or more. An

application for renewal of registration shall be submitted withinthree months from the date of enforcement of this Law. TheMinister of Commerce and Industry shall determine whichindustrial activities are not essential and which shall be excludedfrom the provision of this Article.

Article 14The Directorate General of Industry will issue a registrationcertificate for industrial installations registered in the industrialregister after checking the accuracy of the information filled in theregistration application.

Article 15In case of total or partial amendment to the details given in theregistration application, the owner or Director of the industrialinstallation shall apply for the amendment of the details registeredin the industrial register.

Article 16The Directorate General of Industry shall periodically check thedetails in the industrial register and follow up all the industrialinstallations registered with it. If found necessary, it has the rightto rectify the information on a particular installation registered inthe register after listening to the statements of its owner orDirector.

Article 17All details and information concerning industrial installations shallbe treated as confidential and shall not be circulated or used,except for purposes exclusively in the public interest, by theauthorities concerned.

Article 18The industrial installations, registered with the Directorateaccording to the provisions of this law, shall be announced in theofficial Gazette or in a periodical, in a way appropriate to theMinistry and in the most restricted manner as far as theinformation is concerned in order to safeguard its confidentiality.Also the amendments made on the details given in the industrialregister and the names of those installations asking to be struck offthe industrial register shall be announced.

CHAPTER FOUREncouragement of Industrial Installations

Article 191. After consultation with the Committee for the Development of

Industry, the Minister of Commerce and Industry may:One) Exempt registered industrial establishments in whole

or in part from all existing taxes, or taxes to be imposed inthe future, for renewable periods of five years from the dateof commencement of production *.

Two) Exempt export of locally manufactured industrialproducts from any charges or taxes imposed thereon.

Three) Give, within the allotted budgetary limits, financialincentives to the exporters of locally produced industrialproducts.

Four) Impose or increase, as per Royal Decree No. 17/78,customs tariffs on imports of goods similar to local products,or prohibit or restrict their importation, subject to thesufficiency of local production in terms of quantity, qualityand the consumer’s interests. **

Five) Agree with the concerned authorities to reduce, withinthe allotted budgetary limits, the rates of electricity, waterand fuel for industrial establishments which are subject tothe provisions of this Law.

2. Industrial establishments licensed or registered in whole or inpart shall be exempted from customs duties on the followingimports:One) Machinery, equipment and spare parts required during

periods of establishment, expansion, replacement ormodernization of technology after obtaining the relevantindustrial license.

Two) Raw materials and half-processed goods required by anestablishment for production purposes, for five years aftercommercial registration. The Minister of Commerce andIndustry, at the recommendation of the Directorate Generalof Industry, may extend this exemption for further periods.

The Directorate General of Industry shall determine thoseindustrial imports to be exempted from customs duties as per the

general principles and policies proposed by the Committee for theDevelopment of Industry.

The Directorate General of Industry shall submit to the DirectorateGeneral of Customs lists of machinery, equipment, spare parts, rawmaterial and half-processed goods to be exempted from duties aswell as imported goods similar to local products which are to beprotected.

__________________________________________________________(*) This Article has been cancelled by Royal Decree No. 125/94 by adding anew Article to the Income Tax on Companies Law issued by Royal Decree No.47/81.

(**) This Article has been cancelled by Royal Decree No. 92/94 amendingsome provisions of the Customs Law No. 22/78.

Article 20Preference shall be given while granting government plots, toindustrial installations according to the law and regulations issuedin this respect. The bodies with such Plots of land will arrange fortheir allocation and contracting out at the recommendation of theMinistry of Commerce and Industry and within the limits of thearea and location determined by the permission granted to theinstallation.

Article 21Preference shall be given when purchasing for the government, tolocal products which conform with the provisions of this law,provided that such local products satisfy the standardspecifications in terms of excellence and quality, also including aprice preference in the region of 10% at the most.

Article 22All the government bodies concerned shall, within the limits oftheir resources, facilitate and simplify the arrangements necessaryto expedite the establishment of new industries, particularly thefollowing:

- To provide facilities and services necessary for such industries.- Arrangement for contracting out and handling over

Government plots of land to such industries.- Immigration arrangements such as entry visas and residence

and work permits.

Article 23According to the recommendation of the Industrial DevelopmentCommittee, the Ministry of Commerce and Industry may adviseBanks and government bodies available in the country toparticipate in all or part of the costs of carrying out economical andtechnical feasibility studies of industries of importance to nationaleconomy.

Article 24The Ministry of Commerce and Industry shall work in cooperationwith industrial installations in setting up of displays of Omaniindustry both within and outside the country, also taking part ininternational industrial fairs for the purpose of encouraging andpromoting the products of national industries.

Article 25The Ministry of Commerce and Industry shall advise investors ofthe opportunities available for investment and of the possibility ofsetting up industries required for the Sultanate and the effectingfactors. This has to do by means of publishing the necessaryindustrial facts and information.

Article 26Applicants for any of the privileges stipulated in this law shallapply to the Ministry of Commerce and Industry according to theexecutive regulations issued by the Ministry from time to time.The application shall include the following undertakings:

One) The applicant does not misuse any of the privileges granted.Two) He shall start and continue the activities for which privileges

have been granted according to the terms decided by theMinistry.

Three) He shall take all the necessary steps to guaranteedemand for the products of operations or services protected inthe Sultanate.

Four) He shall ensure that the protected products or operations orservices comply with the measurements and specificationsdetermined by the government bodies concerned from time totime.

Five) He shall not sell, relinquish or permit to use or transferprivileges to another person in any form without first obtainingthe prior written approval of the Ministry of Commerce andIndustry.

Six) He shall comply with other obligations and commitmentsimposed by the regulations in force in the Sultanate.

Article 27The Minister of Commerce and Industry shall not grant privilegesor impose restrictions other than those mentioned in this law orany other rules and regulations currently in force in the Sultanate.

CHAPTER FIVEResponsibilities of Industrial Installations

Article 28Every industrial installation shall allow the staff of the Ministry orof other bodies concerned, who have been appointed by a decision

issued by the Ministry of Commerce and Industry, to enter theinstallation to check its records, accounts and documents or tosupervise its records, accounts and documents or to supervise itsproduction operations, making sure that they are carried outaccording to the planned specifications and measurements. Theyshould also ensure that the exemptions and privileges granted tothe installation according to the provisions of this law are correctlyused. They can inspect the installation’s premises at all convenientand reasonable times.

Article 29Any industrial installation that has imported materials exemptedfrom customs duties according to the provisions of this Law, shallmaintain a record of such imported materials in accordance withthe specimen prepared by the Ministry of Commerce and Industry.

The industrial installation shall not use any of such importedmaterials for purpose other than those for which they have beenimported. In the event of infringement, the originally fixedcustoms duties shall be charged without prejudice to any of thepunishments imposed by regulations of the Sultanate.

Article 30The number of Omani workers in any industrial installation shallnot be less than 25% of the total workforce, and the Minister ofCommerce and Industry may exempt the installation fromobserving this rule or reduce the percentage referred to above ifthere are not sufficient Omanis.

Article 31Industrial installations shall participate together with the State inall its general programmes for vocational training or industrialstudies and research and productivity sufficiency. According to therecommendation of the Industrial Development Committee, theMinister of Commerce and Industry will issue a decision definingthe industrial installations subject to the provisions of this article,whatever the number of their workers and methods ofparticipation.

Article 32Every industrial installation subject to the provisions of this lawshall furnish the Ministry of Commerce and Industry with thefollowing:

One) Periodic and annual reports and statements explaining howthe industry has benefitted from the exemptions granted and towhat event it has developed together with its costs andproduction elements according to the specimen prepared by theMinistry in this respect.

Two) Balance sheet and final accounts for each fiscal year. TheBalance sheet shall be attested by a Chartered Accountantauthorised to pursue his profession in the Sultanate.

Article 33Without prejudice to the provisions of Article (6) of this Law, theMinistry of Commerce and Industry shall, in the event of theinstallation being wholly or partially sold or rented or disposed ofor relinquished in whatever form, or in the event of the operationsbeing totally or partially suspended, be informed within a monthfrom the date of such disposal or suspension, giving the reasons forthat. The person to whom the installation is handed over eitherwholly or partially shall apply for the endorsement of such disposalin the industrial register within a month from the date of disposal,according to the foregoing.

CHAPTER SIXPunishments and General Provisions

Article 34Without prejudice to any harsher punishment stipulated in anyother laws, the following shall apply.

One) A fine of not less than RO 200/- but not exceeding RO1,000/- shall be imposed, in addition to the closure ofinstallation for the violation of provisions of Article (5) of thisLaw. Anyone violating the provisions of Article (13) of this Lawshall be charged a fine of not less than RO 100/- but not morethan RO 500/-.

Two) Anyone who deliberately or knowingly submits inaccurateinformation for registration in the industrial register shall becharged a fine of RO 100/- to RO 500/- or imprisonment forone to six months or both the punishments.

Article 35The following shall apply in the event of violation of the obligationsstipulated in Article (26):

One) Temporarily or permanently depriving the installation of allor some of the privileges granted.

Two) Imposition of punishments the Ministry of Commerce andIndustry finds fit within the limits of the provisions of thepreceding Article.

Article 36The owner or whoever is responsible for the running of anyindustrial installation that practices adulteration in the quality ofits products or produces materials contrary to the methods ofmeasurements and specifications set for production, shall be finedthe equivalent of the benefits earned out of adulteration, plus RO5,000/-. In the event of repetition, the fine shall be doubled, inaddition to the closure of the installation for not more than onemonth, and if the offence is repeated for the third time then theindustrial installation shall be ordered to close down and its licencefinally withdrawn.

Article 37Anyone using materials or goods exempt from customs duties incontradiction to the provisions of Article (29) of this Law shall beliable to the punishments mentioned in the preceding Article: thisin addition to a fine not exceeding three times the customs dutiesimposed on such materials or goods.

Article 38Any other infringement of the provisions of this law or its executiveregulations for which no specific punishment has been stipulated,shall authorise the Minister of Commerce and Industry, on therecommendation of the Industrial Development Committee, todeprive the installation of all or some of the privileges specified inthis Law, after having warned the installation of the occurrence ofsuch infringements.

In all cases, the decision calling for deprivation may bereconsidered if the installation concerned refrains from violatingany of the rules.

Article 39Any employee, entrusted with the task of implementing this Law,discloses secrets or any statements submitted on industrialinstallations in accordance with the provisions of this Law, shall beliable to disciplinary punishments specified in the Civil ServiceLaw, in addition to any other punishment stipulated by the PenalLaws.

Article 40The Ministry of Commerce and Industry will propose rules andissue regulations pertaining to the organization of industrialownership rights and the setting up and running of industrialzones.

Article 41All government bodies concerned are to implement this Law eachwithin the sphere of their jurisdictions.

INCENTIVES AND SUPPORT PROVIDED TO INDUSTRY

The Ministry of Commerce and Industry provides the followingincentives to local industry.

1. Interest-free loans by Government under Royal Decree No.83/80 concerning the financial support to the private sector inagriculture, fisheries, industry, mining and quarrying and RoyalDecree No. 40/87 of the financial support to the private sectorin Industry and Tourism. Sixty-one (61) interest-free loanstotalling approximately RO 21 million were provided to 58industrial firms from the beginning of the second Five-year Plantill June 1988.

2. Low interest rate loans to industrial firms offered by OmanDevelopment Bank.

3. Exemption from customs duties on imports of equipment andraw materials required for production purposes.

4. Tariff protection through imposition or increase of customsduties on imported goods similar to local products or to prohibitor restrict their importation, taking into consideration thequality and quantity of local production and the interest of theconsumer. From January 1979 till June 1988 twelve types ofimported products were subjected to tariff protection. The listof products currently under protection includes some types ofpipes, cement, cement-products, paints, polyurethene products,corrugated cartons, vegetable oil, detergents and chain-linkfencing.

5. Exemption from income tax for a period of five years which canbe renewed for another period of five years starting from thedate of permission of registration of productioncommencement.

6. Planned and serviced industrial plots for setting up factories.

7. Recommendation to the Ministry of Electricity and Water forthe reduction of charges for industrial pruposes for thoseindustries fulfilling the conditions for reduction.

8. Survey of industrial investment opportunities and preparationof feasibility studies important to national economy.

ROYAL DECREE NO. 90/96Amending some Provisions of the Foreign Capital

Investment LawIssued by Royal Decree No. 102/94

We, Qaboos Bin Said, Sultan of Oman

After perusing the Royal Decree No. 26/75 issuing the StateAdministrative Machinery Organistion Law and the amendmentsthereto.

The Royal Decree No. 1/79 issuing the Law of Organising andEncouraging Industry and the amendments thereto.

The Royal Decree No. 47/81 issuing the Law of Income Tax onCompanies and the amendments thereto.

The Royal Decree No. 102/94 issuing the Foreign CapitalInvestment Law, and as necessitated by the public interest.

Have decreed the following:

Article 1The attached amendments shall be effected on the above-referredForeign Capital Investment Law issued by Royal Decree No.102/94.

Article 2Companies already exempted from income tax pursuant to Articles(8) and (9) of the above-referred Foreign Capital Investment Lawshall remain exempted till the period specified for the legalexemption, without prejudice to the provisions of the secondparagraph of Article (2) of the above-referred Royal Decree No.102/94.

Article 3All that infringes this Decree or contradicts with its provisionsshall stand cancelled.

Article 4This Decree shall be published in the official Gazette and shallcome into force effective the date of its publication, except theamendment mentioned in paragraph 4 of Article (8) of the Law,the provision of which shall be applied on the net loss incurredstarting the 1996 tax year which commences on January 1, 1996.

Qaboos Bin SaidSultan of Oman

Issued on : 22nd October, 1996(Published in the official Gazette issue No. 586, dated 2.11.1996)