Overview
Oman’s free zones offer international investors a streamlined pathway to establish business operations with significant regulatory and fiscal advantages. The Sultanate operates several free zones and special economic zones, each with distinct sectoral focuses and incentive packages. Key free zones include the Duqm Special Economic Zone, Sohar Free Zone, Salalah Free Zone, Al Mazunah Free Zone, and Knowledge Oasis Muscat. Companies established in free zones benefit from simplified licensing, customs duty exemptions, and in many cases tax holidays. Each free zone is administered by a dedicated authority that serves as a one-stop-shop for registration, licensing, and operational support.
Key Facts
Free zone companies enjoy 100 percent foreign ownership without the need for a local partner. Tax holidays of up to 30 years are available depending on the zone and the nature of the investment. Customs duty exemptions apply to imports into the free zone and re-exports from the zone. Lease terms for land and facilities are available on long-term basis, typically 25 to 50 years. Free zone companies may sell into the Omani domestic market subject to applicable customs duties and import regulations. Each zone provides dedicated infrastructure including utilities, roads, telecommunications, and in some cases worker accommodation.
Regulatory Framework
Free zones operate under dedicated legislation, with each zone governed by its establishing Royal Decree and implementing regulations. The Public Authority for Special Economic Zones and Free Zones oversees the national free zone framework. Companies must obtain a licence from the relevant free zone authority specifying their permitted activities. Labour regulations within free zones generally follow the national Labour Law, though some zones offer additional flexibility. Environmental compliance is mandatory, with specific requirements determined by the nature of the business activity.
Opportunities
Duqm SEZ offers proximity to a deep-water port and dry dock, ideal for heavy industry, petrochemicals, and logistics. Sohar Free Zone specialises in metals, petrochemicals, logistics, and food processing with excellent port connectivity. Salalah Free Zone provides access to one of the busiest container transhipment ports in the region. Knowledge Oasis Muscat focuses on technology, innovation, and knowledge-based industries. Al Mazunah Free Zone near the Yemeni border facilitates regional trade.
Considerations
Investors should evaluate which free zone best aligns with their industry, supply chain requirements, and target markets. While free zone incentives are attractive, compliance with zone-specific regulations and reporting requirements is mandatory. Companies selling into the domestic Omani market from a free zone must pay applicable customs duties. Workforce planning should account for Omanisation requirements, which may apply within free zones. Infrastructure availability and readiness should be confirmed before committing to specific sites within a free zone.