OPAZ Framework
The Public Authority for Special Economic Zones and Free Zones (OPAZ), established by Royal Decree 43/2021, provides unified oversight of Oman’s economic zones — consolidating previously fragmented zone governance under a single authority.
OPAZ’s responsibilities include:
- Policy and regulatory framework for all zones
- Investment promotion and marketing
- Coordination between zone authorities
- Performance monitoring and reporting
Individual zone authorities (SEZAD for Duqm, Salalah Free Zone Authority, SFZCO for Sohar) retain operational management of their respective zones.
Duqm Special Economic Zone
Zone authority: SEZAD (Special Economic Zone Authority at Duqm), established Royal Decree 119/2011.
Location: Al Wusta Governorate, approximately 550km south of Muscat on the Arabian Sea coast.
Scale: Approximately 2,000 square kilometres — one of the world’s largest Special Economic Zones by area.
Key features:
- Deep-water Port of Duqm — outside Strait of Hormuz
- Oman Drydock Company
- Duqm Refinery (230,000 bpd, operational 2024)
- Planned green hydrogen industrial cluster
- Residential and commercial facilities for zone workforce
Priority industries: Petrochemicals and energy, manufacturing, logistics and maritime services, green hydrogen and renewable energy.
Minimum investment: Varies by industry; generally OMR 500,000-1,000,000 for manufacturing projects.
Salalah Free Zone
Zone authority: Salalah Free Zone Authority (SFZA).
Location: Adjacent to the Port of Salalah, Dhofar Governorate.
Focus: Trade, logistics, light manufacturing, and distribution — leveraging Port of Salalah’s transhipment position.
Key tenants: Pharmaceutical repackaging and distribution, FMCG storage and distribution, food processing, textiles and garments.
Competitive advantage: Direct port adjacency, strong feeder shipping connectivity, access to East Africa and Arabian Sea markets.
Sohar Free Zone
Zone authority: SFZCO (Sohar Free Zone Company).
Location: Within the Sohar Industrial Port Complex, Al Batinah North Governorate.
Focus: Energy-intensive and industrial manufacturing — chemicals, plastics, metallurgy.
Key tenants: Industries linked to the Sohar industrial cluster (aluminium downstream, steel fabrication, chemicals).
Competitive advantage: Established industrial cluster synergies, strong port logistics, proximity to Muscat (200km).
Zone Investor Benefits
All OPAZ-regulated zones offer:
Ownership:
- 100% foreign ownership permitted universally (no Omani partner requirement)
Tax:
- Corporate income tax exemption: 25 years from commencement of production (Duqm: 30 years for some industries)
- No withholding tax on dividends, interest, royalties during exempt period
- No personal income tax on employees
Customs:
- 100% exemption on import duties for inputs, machinery, and equipment used in zone operations
- Duty on goods entering Oman’s domestic market (customs becomes payable at point of onward sale into Oman)
Labour:
- Relaxed Omanisation requirements relative to mainland Oman (lower minimum percentages, with progressive phase-in)
- Streamlined work permit processing for zone employees
Repatriation:
- 100% repatriation of capital, profits, and dividends permitted without restriction
Land:
- Industrial land plots on long-term lease (typically 30-50 year leasehold)
- Serviced plots with power, water, drainage, and road connectivity
Investment Minimum Thresholds
To qualify for zone registration and benefits, minimum investment thresholds apply:
- Duqm SEZ: Variable by industry; substantial manufacturing projects typically require OMR 500,000+ in fixed assets
- Salalah Free Zone: Minimum investment thresholds for various licence categories
- Sohar Free Zone: Varies by plot size and industry type
Zone vs Mainland Investment Comparison
| Factor | Mainland Oman | OPAZ Zone |
|---|---|---|
| Foreign ownership | Up to 100% (most sectors) | 100% universal |
| Corporate tax | 15% | Exempt 25-30 years |
| Import duties | 5% standard GCC tariff | Exempt on zone inputs |
| Omanisation | Sector quotas (10-70%) | Lower/progressive |
| Customs on domestic sales | Standard | 5% on entry to Oman |
| Registration authority | MOCIIP + sector ministries | Single zone authority |
Zone investment is advantageous primarily for: export-oriented manufacturing, high-capital industrial projects, logistics and distribution, and industries where the tax holiday significantly improves project economics.
Mainland investment may be preferred for: domestic market-focused businesses, professional services, retail and hospitality, and businesses where Omanisation flexibility is less important.