Oman Limits the National Treatment to Companies with Non-US Ownership

The U.S.-Oman Free Trade Agreement has recently evolved with regards to the Omani national treatment to U.S. companies that have some percentage of non-U.S. ownership.

The Omani Ministry of Commerce & Industry (MOCI) has clearly indicated that the national treatment benefits under the U.S.-Oman FTA should apply only to companies that are both (i) incorporated in the U.S. and (ii) wholly owned by U.S. natural persons. This would mean that the MOCI believes that the right to hold 100% ownership of an Omani limited liability company would only apply to a company qualifying under part (i) and (ii) above; thereby, limiting the rights of companies who would be parti

Since many larger American companies often have broad ownership bases that may include non-US shareholders, the MOCI will review cases upon request and use their discretion to decide whether they will grant the national treatment to US companies with partial non-US ownership. MOCI will consider the following factors, although there are no set tests set:

What are the U.S. company’s ownership percentages by nationality? A majority US ownership will significantly help.

How much of the US company's business is directed in the US?

How many years has the U.S. company has been in existence?

Is the U.S. company listed on a U.S. stock exchange?

How many U.S.-based employees does the U.S. company have?

MOCI would consider it an abuse of the U.S.-Oman FTA for a foreign company to set up a U.S.-incorporated shell subsidiary for the purpose of partaking of the FTA.

Of course, the fact that MOCI has no clear set test is likely due to a situation such as where a U.S.-incorporated, U.S.-headquartered, U.S. stock exchange-listed company that is majority owned by U.S. shareholders is likely to be accorded FTA treatment even if some percentage of its shares are held by non-U.S. shareholders. Lets remember, however, that the decision is completely discretionary.

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* This article is meant as general information and is not intended to provide legal advice. It also does not create any attorney-client relationship or privileges. As each situation is specific with its individual factors, please call us so we can help you directly. Thank you!