The Minister of Commerce and Industry has issued the executive regulations of the Foreign Capital Investment Law (FCIL), providing an environment attractive for investors from around the world to come and invest in the sultanate.
Creating appropriate conditions for investment in Oman, the regulation has detailed the necessary procedures for registering foreign institutions and companies, terms and conditions, timeframe for approvals, and conditions of permits and licenses related to the investment projects.
H E Dr Ali bin Masoud bin Ali al Sunaidi, Minister of Commerce and Industry, issued executive regulations of the Foreign Capital Investment Law which is based on the Royal Decree No. 50/2019, as was required in the public interest.
Mohammed bin Rashid bin Muhammad al Badi, acting director of the Legal Department of the Ministry of Commerce and Industry (MoCI), said, that Article 2 of the executive regulations of the FCIL stipulates that the competent authority should prepare a register listing all licensed investment projects, approvals, permits and licenses issued for them. It will also have the names and nationalities of investors, the investment costs of the project, and the sources of its finances, benefits and incentives enjoyed by it, sanctions, as well as their other related data and information. The competent authority will also update this registry whenever it will be required and at least once in a year.
The Investment Services Centre of the Ministry of Commerce and Industry will provide its services to all investors, through an electronic system. This system will be made available as mobile phone applications to make it easy for investors to get all information related to their investment projects. “This is required for exchange of applications, data, documents, approvals, permits, and licenses required for the project. These authorities must also provide the centre approved models of forms required each for obtaining approvals, permits and licenses, in addition to the documents and information required as well as prescribed fees for the purpose,” it stated.
Terms and procedures of investment licenses
The Article 7 of the executive regulations of FCIL gives the right to the foreign investor, to entrust himself or through his representative a bank or legal or administrative or financial consulting offices of the sultanate to examine the application for investment license, applications for approvals, permits or licenses required for establishing the investment project. These officers would indicate the extent to which the foreign investor meet all the conditions and legal requirements for these approvals. This is required before they submit their applications to the competent authority.
For the application, they would have to get a certificate from the bank or the office duly valid for a period of six month from the date of its issue. The competent authority can object or question any of the information provided in application during a maximum period of ten days since its submission. However, the objection has to be justified.
These offices can submit the applications to the competent authority on behalf of the foreign investor and do their follow-up. The competent authority must prepare a register in which the names and data of the licensed and accredited offices are recorded in accordance with its terms and conditions. These offices must maintain the confidentiality of the data and information related to investment applications, he said.
Obtaining investment license
Mohammed al Badi pointed out that Article 8 of these executive regulations specify the information required from a foreign investor to obtain an investment license, while submitting the application through the electronic system attached to it. The information required includes: investor’s name, nationality, place of residence and bank details (bank name – account number), type of activity he want to start, previous experience – if there is any, number of workers expected to be employed in the investment project, schedule for the implementation of the investment project date of commencement of the operation, economic feasibility study of the investment project, certificate of approval issued by one of the banks or offices referred above, and any other information asked by the competent authority.
He added, that the Article 9 of these regulations talks about the terms and conditions, procedures and deadlines for issuing approvals, permits and licenses related to investment projects. These are the same terms and conditions, as well as procedures available in the electronic system Invest Easy for the information of all types of investors. This information is also available in the investment guide issued under the ministerial order.
Article 11 of the executive regulations specy the timeframe for deciding the applications submitted for approvals, permits or licenses required for the investment project by the competent authorities. After their submission, if all information and documents are required made available, it will take 14 days for a decision. If any response is not given during this period, it would mean that the application has been approved. In case of the rejection of the application, it must be justified.
“The competent authority will issue the investment license within three working days starting from the date of fulfillment of all approvals, permits or licenses necessary for the investment project. The foreign investor is entitled for one approval to establish, operate and manage the investment project to help contribute to achieve economic development in public utility activities, infrastructure, renewable energy, roads, transportation, or ports. All this provided, the approval is self-executing without the need to take any further action on it, and if the cost of the project is not less than RO10mn.
The project must help in transfer of information and modern technology or uses technology of the fourth industrial revolution and make commitment to assign 10% of the related work to the small and medium enterprises, and also commit that the percentage of Omani products used to create the investment project is not less than 10 %.” he said.
The application for obtaining one approval will be submitted to the competent authority according to the model form prepared for the purpose. The latter will study the application and verify that the above-mentioned conditions are met. The head of the competent authority will submit the application to the council of ministers for decision.
Benefits and incentives
The Foreign Capital Investment Law has many benefits and incentives for a foreign investor. The rules which were determined as the executive regulations have made these benefits clear. It has said that the investment projects would be given preferential treatment for which application will be submitted through a model application form with which all information and documents have to be provided for getting approval.
The council of ministers can approve investment project being set up in less developed governorates of the sultanate and give it certain benefits like 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 to exceed five years and exclude them from Omanisation for a period of two years from the date of the actual operation of the project.
These projects can be exempted from all duties or some of them. The council of ministers can give other benefits also 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. For the purpose, it is also necessary that the products of the project are not less than 40 % Omani, if any. The project would export not less than 30% of its production outside the sultanate. It also must help in transfer of expertise, modern technology and knowledge to the sultanate, said the acting director.
He added, “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. 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.”
The period of exemptions from customs and non-customs duties and fees will be determined separately for each activity. The institution or the company, established by the foreign investor and which were exempted from the duties, must submit tax returns according to the dates and procedures stipulated by law.
Allocation of land and real estate for investment projects
The allocation of land and real estate required for the investment project will be by way of a long-term lease or by granting the right to use. The application for allocation will be submitted to the competent authority on the prescribed form accompanied with the required documents and information. The application must indicate the purpose of using the land or real estate, required space, proposed location.
The application will not have any legal rights. The competent authority would lease or grant the right to use after studying the application. It will take decision on the application in a period not exceeding 20 working days from the date of its submission.
In case, no response comes and the time lapses, it would mean that the application has been rejected. In all cases, the refusal of the application must be justified by the competent authority. In the case of approval of the application, the period of the lease or use of lands or real estate designated for the investment project will be 50 years, which will be renewable with the approval of the concerned authority related to leasing or granting the right to use, and according to the agreed terms, provided the foreign investor continues his activity.
In all cases, the competent authority may increase the rental value or the right of usufruct when renewing the lease period or usufruct.
The foreign investor is prohibited from using the land or real estate designated for the investment project for the purpose other than that for which it was given. He may change the purpose stipulated in the lease or usufruct contracts if the nature of the land or property and its location allow it, provided that there is approval of both the competent authority and the authority concerned with leasing or granting the right to usufruct obtained.
The contract of the lease or use of the land or real estate designated for the investment project cannot be terminated except after the approval of the competent authority. In all cases, the termination decision must be justified, and the foreign investor must be given notice in a period of not more than 15 days before the announcement of the decision, said Badi.
Inspection and monitoring:
The Article 35 of the executive regulations of the Foreign Capital Investment Law specifies inspection and monitoring procedures. It said that the officials of the competent authority should do the follow up of the performance of the investment project, and submit a report to the minister or head of the authority, as per case, every six months. The report should include in particular the extent of the foreign investor’s commitment to the terms of the investment license issued to him, schedule submitted by him to implement the investment project and approved in accordance with the economic feasibility study, environmental protection requirements, work ethics, and maintaining general health and safety norms.
The officials of the competent authority will have the legal right to enter the headquarters of the investment project, and any of its annexes or facilities for inspection and monitoring. In particular, they have right to access to records, books, documents and computer systems, copies of copies of them. They can also take any measures considered necessary to implement the provisions of the law and its executive regulation. It is prohibited for the foreign investor to hinder, obstruct or prevent these officials from performing their tasks and using their powers.
The foreign investor must submit to the competent authority all the information, data and other documents required by it related to the investment project. The competent authority shall have the right to use any of them for statistical purposes or any other purposes consistent with its monitoring powers, he said.
Mohammed al Badi added that for the achievement of the objectives of inspection and oversight, the foreign investor must adhere to the commitment of providing an annual report within 60 days after the end of the fiscal year to the competent authority. The report should include a copy of the audited financial statements for the ending fiscal year, and the auditor’s report thereon. The report should also have description of the procedures which have been taken to implement the investment project in accordance with the timetable set for it, developments during the ending fiscal year, along with details of the number of workers in the investment project, their jobs and nationalities, and any other additional information required by the competent authority.
Mohammed al Badi also said that Article 39 of the executive regulations of FCIL specifies the administrative sanctions imposed on the foreign investor, in case of his violation of the provisions of the law or the regulations. “It is mandatory for the competent authority to give notice to the foreign investor about the violation attributed to him to correct him within 30 days from the date of the related notice. The competent authority may extend this period for a similar period.”
In the case that the violation is not corrected during this period, the competent authority has the right to stop the foreign investor’s activity for a period not exceeding six months. If this period also elapses without correcting the violation, the competent authority can revoke the investment license. If the foreign investor commits the same violation or any other violation within one year from the date of notice given to him of the first violation, the competent authority can make him deprived of all the incentives and benefits given to him or some of these benefits.
The investment license will be canceled when the legal entity ceases to exist or does not do the activity for a period of two years from the date of is establishment. He said that the in all the cases, the foreign investor may complain about the decisions issued by the competent or concerned authority regarding his investment project before the grievance committee as stipulated in Article 30 of the Foreign Capital Investment Law formed under the decision of the Minister of Commerce and Industry.