The State Financial and Administrative Audit Authority (SAI) of Oman published its 2024 Annual Report, highlighting irregularities in government units and investment-related entities. Key findings include:

• Misuse of Investor Residency: 378 foreign workers in elementary occupations (e.g., domestic workers, camel herders, private drivers) obtained investor residencies by converting their permits to business partnerships.
• Exploitation of Investment Incentives: Some foreign investors gained residency and commercial privileges (e.g., RO3,000 fee exemption) without actual investment activities or financial solvency.
• Weak Licensing Controls: Investment permits were granted without accredited feasibility studies, and some were based solely on undertakings, risking low-value or non-operational ventures.
• Inactive Companies: Licenses were not renewed for companies that remained inactive, and 52 investors were deregistered without revoking their incentives.

Regulatory Actions Taken

To curb abuse and strengthen oversight, the following measures were introduced:

• Ban on Commercial Registers: Foreign residents in low-skilled occupations are now prohibited from obtaining commercial registers.
• Employer NOC Requirement: Foreign investors must secure a no-objection certificate from their employer and prove financial solvency.
• Mandatory Accredited Feasibility Studies: All investment license applications must include studies from accredited firms.
• Audit of Past Licenses: Previous licenses are being reviewed to assess compliance and value addition.
• Coordination with Ministry of Labour: To address deregistration and withdrawal of incentives.

Implications for New and Existing Companies

For New Companies:

• Stricter Entry Barriers: Foreign entrepreneurs must now meet higher documentation standards, including accredited feasibility studies and employer NOCs.
• Reduced Shortcut Access: The loophole of converting low-skilled residency into investor status is closed, ensuring only genuine investors enter the market.
• Higher Compliance Costs: New entrants may face increased costs for feasibility studies and legal documentation, potentially deterring small-scale or speculative ventures.

For Existing Companies:

• License Renewal Scrutiny: Inactive companies risk non-renewal unless they demonstrate operational activity and value creation.
• Audit Exposure: Firms previously granted licenses without proper documentation may be subject to retrospective audits and potential penalties.
• Loss of Incentives: Deregistered entities may lose access to previously granted benefits unless they requalify under the new rules.

Strategic Outlook

These reforms signal a shift toward quality over quantity in foreign investment. Oman is tightening its investment ecosystem to attract credible, value-adding ventures while deterring misuse. For serious investors and compliant businesses, this creates a more stable and transparent environment. However, for informal or speculative setups, the landscape has become significantly more challenging.

Source:

Audit report highlights misuse of investor residency – Oman Observer