Oman becoming a popular jurisdiction for Russian businesses as UAE tightens regulations

MOSCOW. May 14 (Interfax) - Russian businesses are increasingly interested in Oman as a more predictable jurisdiction than the traditionally popular United Arab Emirates, whose status as the Middle East's standard hub for registering companies and conducting settlements could be at risk from a tightening of regulatory requirements and sanctions compliance, Vedomosti reported, citing lawyers and consultants.

More and more requests are being made to register companies as well as to open bank accounts and obtain resident visas in Oman, Andrei Gusev, senior partner at the Nordic Star law firm, Alexander Roganov, lawyer at NSV Consulting and Vladislava Tarasenko, consultant at IPN Partners, told the paper.

Interest among Russian investors is shifting firmly towards Oman from the UAE, which is still the standard jurisdiction to register companies and open accounts, Gusev said. They see Oman as a more predictable alternative, especially for cross-border settlements, he said. UAE banks have tightened their policy towards Russian clients in the last few months: they have been blocking accounts and stopped servicing them without explanation, while Oman, which has not joined the sanctions against Russia, remains neutral, Gusev said.

In their bid to mitigate sanctions risks, Russian businesses are looking for neutral jurisdictions with simplified capital requirements and which are friendly to non-residents, NSV Consulting's Roganov said. Oman is less integrated into the Western financial system than the UAE, which lowers the risk of accounts being blocked, he said. The Emirates' reputation as a safe haven for Russian investors has been affected by the broadening of the scope for the United States to impose secondary restrictions for violating anti-Russian sanctions in 2024, said White Stone lawyer Viktor Mashinsky. After that, the Emirates started to check the origin of capital and tightened regulatory requirements, for example, for the residency of managers, Roganov said.

The agreement on the avoidance of double taxation has made Oman more appealing to Russian businesses, Mashinsky said. Nordic Star's Gusev mentioned a more favorable political backdrop, in particular, Oman's invitation to the St. Petersburg International Economic Forum in 2024.

Oman is particularly attractive for medium and large businesses focusing on manufacturing projects, said Natalia Patseva, Managing Partner at FTL Advisers. This is aided by developed special economic zones and the ports of Salalah, Duqm, Sohar and Muscat, which bring convenient logistics. Oman is also being viewed as a hub for registering trading companies in the interests of international relations, she said.

Oman is turning into a key link in logistics chains between Russia, India, China and Africa, and it is there that Russians are most frequently setting up companies and settlement offices for transit operations and signing contracts and to handle commodities, Gusev said. Industrial and real estate investments are also popular with Russian businesses: Oman's special economic zones offer foreigners preferential terms, and buying real estate make them eligible for a resident visa and to open a bank account, Mashinsky said.

Big Russian businesses are already looking closely at infrastructure, industrial and IT opportunities in Oman, said Kristina Tantsyura, Managing Partner of Sky Consulting Group. Small and medium businesses mainly go to the Emirates for quick registration, lucid regulations, a comfortable tax system and bank accounts. Also, there is more competition and a higher cost of living in the UAE, while Oman's expat infrastructure is not strong, she said.

Oman has its peculiarities, for example, where hiring local employees concerned, but they are surmountable and do not create significant barriers, Gusev said. The Sultanate is a "strategically rational" option for businesses focused on international markets and sensitive to sanctions risks, he said.