Free Zones in Oman
Oman has created a network of free trade zones to attract investment and strengthen its position as a centre for trade, logistics and manufacturing across the Gulf. Each free zone in Oman sits close to major ports, airports and transport corridors, giving companies direct access to regional and international markets.
The government’s approach has been to develop a small number of well-planned zones that each focus on specific industries such as logistics, petrochemicals, manufacturing, technology and services. Investors can own their businesses outright, benefit from long tax holidays and enjoy exemptions from import and export duties, together with the freedom to repatriate all profits and capital.
The General Authority for Special Economic Zones and Free Zones (OPAZ) was set up in 2020 to oversee Oman’s special economic zones, free zones and industrial cities. It drives digital transformation and encourages foreign investment by offering tax exemptions, streamlining procedures and developing strong infrastructure to support various sectors for long-term growth.
Oman Free Trade Zone Benefits
All free zones and special economic areas in Oman offer a package of advantages to attract investment and promote export-oriented growth. Typical incentives for free zone companies include:
Each zone adjusts its incentives to suit its focus. Duqm integrates road, port and airport facilities for large-scale projects, while KOM provides purpose-built technology and data infrastructure to support innovation.
Special Economic Zones and Free Zones in Oman
The key areas under OPAZ supervision are the Special Economic Zone at Duqm (SEZAD), Al Mazunah Free Zone, Salalah Free Zone (SFZ), SOHAR Free Zone, Knowledge Oasis Muscat (KOM) and Khazaen Economic City.
Duqm Special Economic Zone (SEZAD)
Covering more than 2,000 sq km in a strategic location in the Al Wusta Governorate with a coastline of 80 km, Duqm is the largest special economic zone in the Middle East and North Africa (MENA) region. It is a central part of Oman’s Vision 2040 diversification plan, hosting designated areas for energy, logistics, fisheries, tourism and heavy industry. Current incentives include:
Al Mazunah Free Zone
In the Dhofar Governorate near the Yemeni border, the Al Mazunah free zone serves as a trade bridge linking Oman with Yemen and East Africa. Key sectors include commercial, light industries and service operations and key benefits include 100% foreign ownership, a 30-year tax holiday, exemption from customs duties and no minimum capital requirement.
SOHAR Free Zone
Located adjacent to the deep-sea Sohar Port on the Gulf of Oman, Sohar Free Zone has become a key site for the metals, petrochemicals and food processing industries, as well as supporting green manufacturing, logistics and trade. It offers 100% foreign ownership, a 25-year corporate tax holiday, seamless customs and reduced Omanisation requirements during the first decade. Companies also benefit from a one-stop-shop system that streamlines registration and licensing.
Salalah Free Zone (SFZ)
Adjacent to one of the busiest container ports in the region, Salalah Free Zone provides simplified customs procedures with strong industrial infrastructure and access to major shipping routes. Key high-growth sectors include logistics, manufacturing, assembly, pharma, chemical processing and green hydrogen. Salalah Free Zone offers 100% foreign ownership, a corporate tax exemption up to 30 years, exemptions from Customs Duties and VAT, no minimum capital requirements and work permits for up to 80% of foreign workforce.
Knowledge Oasis Muscat (KOM)
Knowledge Oasis Muscat is a technology park located 30 kilometres from Muscat and 10 minutes drive from Muscat International Airport. KOM neighbours Rusayl Industrial Estate, the Sultanate’s largest industrial park, and Sultan Qaboos University. KOM supports IT, communications and research-based enterprises. It offers a modern setting for innovation and technology-driven firms, with flexible lease options and lower Omanisation ratios.
Khazaen Economic City
Situated in Barka, Al Batinah South Governorate, Khazaen is a part of the Greater Muscat where both the population and commercial and economic activity are growing most swiftly. An integrated logistics and industrial hub, it has dependable transportation infrastructure connecting to the Sultanate’s main land borders, ports and airports. Khazaen Economic City offers 100% foreign ownership, a corporate tax exemption for up to five years for industrial projects, lease of lands and facilities for a period up to 45 years and lower Omanisation ratios.
The New Law
In April 2025, the Oman government issued Royal Decree No. 38/2025 promulgating the New Law for the Special Economic Zones and Free Zones, which introduces the legal and regulatory framework applicable to Zones operating under OPAZ.
The New Law aims to enhance legal certainty, streamline licensing and administrative procedures. It enhances the competitiveness of Oman’s investment zones by providing a harmonised regime of incentives and protection to investors who have set up or intend to set up operations in the Zones.
Current incentives, permits and approvals remain unaffected for existing operators and enterprises in the Zones until the expiry of their respective operations periods, in accordance with the legislation and their existing agreements.
- Licensing system – a digital portal is introduced for centralised processing of licences, permits and service delivery.
- Foreign ownership – 100% foreign ownership will be permitted to operators, enterprises and real estate developers.
- No minimum capital requirement – enterprises and real estate developers are exempted from a minimum capital requirement, subject to approvals.
- Tax incentives – 10-year exemption from income tax from the date of commercial operations, with a possibility of extension for two additional periods for activities of a special nature (to be specified in the Executive Regulations), subject to approvals. Exemptions will not be available to banks, financial institutions, insurance and reinsurance companies, telecommunication companies, construction companies, and land and maritime transportation companies.
- Customs – a Customs Directorate is to be set up within each SEZ to oversee the movement of goods. Goods imported into or exported from the Zones will not be subject to Customs duties.
- Real estate development – Real estate developers are permitted to sell project units to non-Omanis (natural and legal persons) under the freehold system and the creation of gated communities with conditions and rules to be specified in the Executive Regulations.
- Residency rights and work permits – A branch of the Directorate General of Passports and Civil Status (immigration office) is to be established in the SEZ for on-site issuance of visas, permits and clearance to non-Omanis.
The Executive Regulations are scheduled to be issued within one year of the issue of the New Law, by April 2026.
Establishing a Free Zone Company (FZC) in Oman
Setting up an Oman Free Zone Company is generally faster and more flexible than forming a mainland entity. The process generally involves:
- Submitting an application to the relevant Free Zone Authority with business details and a project plan.
- Obtaining environmental clearance from the Ministry of Environment & Climate Affairs.
- Securing a plot or office space within the relevant zone.
- Signing a lease (usufruct) agreement with the Free Zone Authority.
- Completing company registration and licensing through the Free Zone’s one-stop-shop (OSS) service, which streamlines investor-related procedures.
Investors must typically provide supporting documents covering ownership details, capital investment, business activity, plot size, staff numbers and contact information.
How Sovereign can help
Sovereign provides complete support for investors establishing operations in Oman’s free zones or special economic areas. Our team assists with:
- Choosing the most appropriate Free Zone and business structure.
- Managing business registration and licensing formalities.
- Liaising with Free Zone authorities and other government bodies.
- Assisting with land and facility allocation.
- Assisting with customs coordination and facilitation.
- Handling visa applications, Omanisation compliance and employment procedures.
- Providing ongoing corporate services such as accounting, payroll, HR and regulatory compliance.
- Assisting with renewal of licences and permits.
With more than 35 years of experience in international company formation and administration, Sovereign’s Muscat office ensures that each Free Zone business is properly established, fully compliant and well positioned to succeed in Oman’s growing economy.
Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.
