Oman’s New Capital Market Incentives Program

                                                                                             LISTEN TO THIS ARTICLE

The Omani FSA’s Capital Market Incentives Program (CMIP) marks a significant step in Oman’s economic development strategy. The program is designed to encourage and incentivise the establishment and the  conversion of private entities into joint stock companies, thereby strengthening the Muscat Stock Exchange (MSX).

The program provides tax as well as non-tax benefits to newly formed joint stock companies as well as hand-holding in the initial years of establishment. 

Let’s read on to find out the details. 

First Path Incentives 

The first path of CMIP focuses on the establishment of new public joint stock companies and the conversion of private and family companies whose market value exceeds OMR 10 million into public joint stock companies. The offer for such companies must be at least 25% of the company's capital. 

Incentives include a 2/3rd refund on income tax for 5 years post-listing, exemption from additional taxes related to installment payments, and a 10% price preference in government tenders. Additionally, companies will benefit from waived listing fees transfer agent’s fees for 3 years and fast-tracked regulatory approvals. 

The program's rules require that the company is prohibited from converting into any other legal form within 5 years after the end of the incentive period.

Second Path Incentives 

The second path of the CMIP focuses on the creation of the "Promising Companies Market" within the MSX. This sub-market is tailored for smaller entities, including private, family-owned businesses, small and medium enterprises (SMEs), and emerging companies with a market value exceeding OMR 500,000. To encourage these companies to list, the CMIP offers incentives similar to the first path incentives. These include a 2/3rd refund on income tax for companies post-listing, 10% price preference in government procurement and tender contracts, exemption from listing and prospectus fees for the first 3 years of the program.

The FSA will also provide guidance and advice, including a training program to prepare entrepreneurs and company owners for the listing process. Simplified forms of financial disclosures and prospectuses, tailored to the needs of smaller companies, will be available, easing the burden of compliance. The MSX will cover the costs of the issue manager for the first 5 companies to list, while also promoting these companies through extensive media coverage, enhancing their visibility to potential investors.

Third Path Incentives

The third path targets the conversion of limited liability companies (LLCs) into closed joint stock companies, serving as a preparatory step for potential listing in the Promising Companies Market. Companies that choose this path will benefit from a 1/3rd refund on income tax for 2 years following their conversion. Additionally, they will receive a 10% price preference in government procurement contracts and tenders for 2 years.

Further, the FSA has streamlined the process by providing a fast track for financing applications submitted to the Development Bank, ensuring quicker access to capital. The rules for conversion include a requirement that the company’s market value must be at least OMR 500,000, as verified by an FSA-approved valuation firm. Furthermore, the company must have at least 3 partners, employ at least 20 Omani citizens and must have permanent licensed premised for conducting business. 

Conclusion 

The CMIP is expected to significantly impact Oman’s economic landscape by incentivising the conversion of companies into joint stock entities. The program supports long-term economic development, enhancing market liquidity and investment opportunities in alignment with Oman Vision 2040. Companies and LLCs must evaluate the establishment / conversion into joint stock companies in consultation with their advisors. 

Disclaimer: Content posted is for informational and knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.