By: Noor Al Khonji (Bait Al Qanoon)


What are free trade and special economic zones?

These are geographically defined business areas that offer benefits to companies operating in them, such as exemptions from tax, customs, and duties and simplified administrative procedures, e.g. company incorporation, and visas for expatriates and their families. 

Are there free trade and special economic zones in Oman?

Following the issuance of Sultani Decree No 56/2002 promulgating the Free Zones Law, three Free Trade Zones have been established in Oman: 

  • Sohar Port and Free Zone
  • Salalah Free Zone
  • Al Muzanah Free Zone

Each zone is situated in strategic locations across Oman with access to important trade routes, which we have described further below. 

Each zone usually provides infrastructure and additional opportunities for specific sectors or industries. 

Companies setting up in these zones will be expected to carry out their business activities inside the zone and export only a certain percentage of their products, to be eligible for the various benefits offered. 

Special Economic Zones have also been set up in Duqm and in Muscat, namely Duqm Special Economic Zone and Knowledge Oasis Muscat Special Economic Zone. 

1. Sohar Port and Free Zone 

The Sohar Port and Free Zone ("SPFZ") is in Sohar, a port city in the north of Oman between Muscat and the border with the United Arab Emirates and is at the centre of important global trade routes. 

The zone offers several incentives to investors:

  • 100% foreign ownership of a company is permitted 
  • Low capital requirements
  • Corporate tax holidays of up to 25 years 
  • 0% duties on imports and re-exports 
  • 0% Personal Income Tax on individuals coming in and working in the Freezone
  • 0% Value-Added Tax
  • Relaxed levels of Omanisation 
  • Free Trade Agreements with the US and Singapore
  • Variety of licensing options

Opportunities for key sectors in logistics, chemical and material processing, petrochemicals, manufacturing and assembly, automotive and textiles.

2. Salalah Free Zone

The Salalah Free Zone ("SFZ") is in Salalah, a city in the South of Oman near the border with Yemen. 

The zone is close to the port of Salalah and Salalah International Airport. 

SFZ offers several incentives to investors:

  • 100% foreign ownership of a company is permitted
  • 0% customs duties on imports and exports
  • Low capital investment requirements
  • No taxes on profits or dividends for up to 30 years
  • No tax on personal incomes
  • Free-trade agreements with US and Singapore 
  • Exemption from corporate taxes
  • Variety of licensing options

Opportunities for key sectors in logistics, food, chemicals, renewable energy and pharmaceuticals.

3. Al Mazunah Free Zone

The Al Mazunah Free Zone (“AFZ”) is located in the south of Oman and close to Oman’s border with Yemen.

AFZ offers several incentives to investors:

  • Exemptions from customs duties on imports
  • Low capital investment requirements 
  • Exemptions from the law of commercial agencies
  • Permission to import certain goods into the Sultanate of Oman
  • Corporate tax holidays of up to 30 years
  • Relaxed levels of Omanisation 
  • Yemeni nationals can work in AFZ without a work visa 
  • Approval of Yemeni customs for goods imported from Yemen
  • Factories operating in AFZ are granted a national certificate of origin 
  • Variety of licensing options

Opportunities for key sectors in general commerce, industrial and services.

4. Duqm Special Economic Zone

Duqm Special Economic Zone (“DSEZ”) is located on the east coast of Oman, about 550km from Muscat. It is the largest special economic zone in the MENA region, and the zone contains several sector-specific areas. It has a multi-purpose port, fishing port, dry-dock for vessel repairs and an airport. 

DSEZ offers several incentives and benefits to investors: 

  • 100% foreign ownership of a company is permitted 
  • No currency restrictions 
  • No minimum capital investment requirements 
  • Income tax exemptions of up to 30 years 
  • Relaxed levels of Omanisation
  • Simplified immigration and residency permits for expatriates and their families. 
  • Simplified customs procedures 

Opportunities for key sectors in logistics, tourism, fisheries, seaport and dry-dock activity, industry, education and training. 

5. Knowledge Oasis Muscat Special Economic Zone

Knowledge Oasis Muscat (“KOM”) is in Muscat and is considered to be Oman’s first 1 million square meter technology park. It is situated close to Muscat International Airport. 

KOM offers several incentives and benefits to investors: 

  • 100% foreign ownership of a company is permitted 
  • Low capital investment requirements
  • Relaxed levels of Omanisation 
  • No foreign exchange controls
  • 0% Personal Income Tax
  • Long-term land and lease contracts
  • Simplified business incorporation procedures 

Opportunities for digital, technology, IT and knowledge-based sectors.

There are several different zones in Oman. For investors considering establishing a business in Oman, the free zones may be an attractive option. The choice of the zone will ultimately be down to many factors: location, access to trade and supply routes, industry/sector clusters inside the zone, and the incentives offered. 

However, to set up business in Oman, it is not a requirement that a foreign investor establish a company in one of these zones. On-shore options are available and with the introduction of Sultani Decree No. 50/2019 on the issuance of the Foreign Capital Investment Law, foreign investors are generally permitted to establish 100% foreign owned Omani companies on the mainland in Oman. There are however restrictions on restricted sectors (e.g. Oil and Gas). 

If you are a foreign investor considering investment in Oman, then please contact us for further support.