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What a free zone actually gives you

A free zone is a fenced customs area that sits outside Oman's normal customs territory, so goods come in without duty and leave for export without duty. Tax and labour rules inside the fence are lighter than on the mainland, and that gap is why investors look here.

Three of the free zones in Oman matter most to foreign makers and traders: Salalah, Sohar and Duqm. Each was built for a different kind of business, so picking the wrong one is costly in time and money.

The headline package looks the same in all three. You can own 100 percent of your company, there is no minimum share capital, and profits move out freely. The 5 percent VAT charged on the mainland does not apply inside the zones, says the Public Authority for Special Economic Zones and Free Zones.

The real differences sit underneath that package. Tax holiday length, the Omanisation rate, land terms and sector fit all vary by zone, and those four things should decide where you go.

The 2025 law that reset the rules

Before you compare brochures, know that the legal base under all free zones in Oman changed recently. Royal Decree 38/2025 came into force in April 2025, bringing in a single Law of Special Economic Zones and Free Zones and repealing the old Free Zones Law of 2002.

Article 27 sets the standard tax break at 10 years from the day you start trading, renewable for two further periods of the same length. That is how the widely quoted 30-year figure is built: 10 years, then two renewals rather than one flat grant.

The same article carves out sectors that get nothing. Banks, financial firms, insurers, telecom providers, construction firms and transport companies are all excluded, and the Minister of Finance issues the tax break itself.

Article 28 frees machinery, equipment, spare parts and raw materials from customs tax on entry. Article 13 requires worker permits within five working days, and treats silence past that deadline as approval. You can read the full text on the official decree record.

Salalah Free Zone built around a transhipment port

Salalah Free Zone opened in 2006 under Royal Decree 62/2006, and covers roughly 19 square kilometres in Dhofar, in the far south of the country.

Its whole reason for existing is the Port of Salalah next door. The port handled about 3.3 million TEU in 2024 and ranked second in the world on the 2021 Container Port Performance Index. Ships on the Asia to Europe route pass it without a detour.

OPAZ states the incentives plainly for Salalah Free Zone: no tax on profits or dividends for 30 years, no customs duty on imports and exports, no minimum capital, no personal income tax, and no limit on sending money home.

The zone targets logistics and distribution, chemical and material processing, and assembly work. Published Omanisation figures for Salalah run from 10 to 20 percent depending on the source, so confirm the current rate when you apply.

Salalah suits you if your cargo moves through Oman rather than into it, so regional distribution centres, light assembly and re-export firms do well here.

Sohar Free Zone for metals chemicals and the road north

Sohar Free Zone was created in 2010 under Royal Decree 123/2010, and covers 45 square kilometres in Al Batinah North, between Muscat and the UAE border.

That position is the point, because Sohar is the only one of the three with fast road access to Dubai and Abu Dhabi. For heavy, low-value cargo, that road matters more than a shipping lane does.

OPAZ lists a tax holiday of up to 25 years, 0 percent import or re-export duty, 0 percent personal income tax, and a low capital rule. The holiday is five years shorter than Salalah and Duqm offer. Omanisation in Sohar is widely published at 15 percent for the first 10 years from the date of set-up.

The industrial base here is already built, with clusters in metals, petrochemicals, food processing, green manufacturing and logistics. A recent expansion added 500 hectares of leasable land.

Choose Sohar if you need suppliers, buyers or utilities that already exist on site, and if part of your output goes north by truck.

Duqm has the most land and the longest holiday

The Special Economic Zone at Duqm was set up in 2011. It covers more than 2,000 square kilometres, the largest zone of its kind in the Middle East and North Africa. It has an 80 kilometre coastline, and Muscat is about 600 kilometres north.

Duqm offers the strongest terms on paper. Its published incentive list includes a tax break of 30 years from the start of business, renewable for another 30 years. Usufruct land deals run up to 50 years and renew for similar periods. Companies are also exempt from the minimum capital rule in the commercial companies law, and foreign ownership can reach 100 percent.

Investors get three months to inspect an allocated site, and applications for expatriate manpower must be handled within five working days.

The anchor tenant tells you who Duqm is for. The OQ8 refinery processes around 230,000 barrels of crude per day and was built under contracts worth about USD 5.75 billion, and it sits beside a commercial port and a drydock.

Duqm rewards patience and scale rather than speed, and its Omanisation rate is set by the SEZAD board, so it is agreed case by case.

Free zones in Oman compared side by side

Salalah Free Zone. Tax holiday of 30 years, with Omanisation published between 10 and 20 percent. Zero customs duty on imports and exports, and no minimum capital. Best for transhipment, regional distribution, light manufacturing and chemicals that ship by sea.

Sohar Free Zone. Tax holiday of up to 25 years, the shortest of the three. Omanisation is widely published at 15 percent for the first 10 years. Zero import and re-export duty, and a low capital rule. Best for metals, petrochemicals, food processing and anything trucked to the UAE.

Duqm Special Economic Zone. Tax break of 30 years, renewable for a further 30, with usufruct land for up to 50 years. No minimum capital, and an Omanisation rate set by the SEZAD board. Best for refining, heavy industry, marine services and projects that need very large plots.

Duqm wins on paper, but Sohar usually wins on time to production, because its supply chain and utilities already exist.

Free zone or mainland the trade-off nobody advertises

Here is the catch. The duty exemption applies to exports, not to sales inside Oman. OPAZ is clear that customs relief covers exported products and excludes the local market.

So when your goods leave the zone and enter the Omani market, they count as imports, and attract the 5 percent GCC common external tariff plus 5 percent VAT. Your customs advantage disappears at the fence line.

Mainland registration has its own maths. Corporate income tax is a flat 15 percent, with a reduced 3 percent rate for qualifying small firms. Since the Foreign Capital Investment Law of 2019, foreign investors can hold 100 percent of a mainland company in most activities. Full ownership is no longer something only the free zones in Oman can offer.

Some businesses should not use a zone at all. Retail shops, restaurants, clinics, local service firms and contractors bidding for Omani government work all belong on the mainland. Remember too that Royal Decree 38/2025 excludes banking, insurance, telecoms, construction and transport from the zone tax break. If that is your sector, the main reason to be inside the fence has gone.

Our guide to the types of commercial companies in Oman explains which legal form suits each route.

What it costs and how long it takes

Land and lease rates are the honest gap in any comparison of the free zones in Oman. None of the three publishes a standard rate per square metre, because pricing depends on plot size, sector, utility load and committed investment, and it is quoted on application. Treat any article quoting a firm figure with suspicion.

What is published is the shape of the deal: Duqm grants usufruct for up to 50 years with renewal, and zone leases for offices and warehouses commonly start at a five year minimum term.

Setup time is far clearer. A free zone company is usually registered within one to three weeks, because the zone runs one-stop-shop licensing. Mainland initial approval through the Invest Easy portal usually takes three to five working days, and regulated sectors take longer. Our company formation service in Oman handles both routes.

How to choose between the free zones in Oman

Start with your customer, not the tax rate. If most of your revenue comes from outside Oman, a zone is right, but if most of it comes from Omani buyers the mainland is right and a zone will only add friction.

Then match the zone to your cargo. Sea freight to Asia, Africa and Europe points to Salalah. Road freight to the UAE with an existing cluster points to Sohar. Very large plots, deep water and heavy process industry point to Duqm.

Finally, check the excluded sectors and the Omanisation rate before you commit to a plot, because both are set at zone level and both change over time. Once you are licensed, our post company formation services cover visas, payroll and annual filings. The full sequence is set out in our note on the steps for establishing a company in Oman.

Frequently Asked Questions

Can a free zone company sell inside Oman?

Yes, but not free of duty. Goods leaving the zone for the Omani market count as imports, and pay the 5 percent GCC tariff plus 5 percent VAT. Many investors set up a mainland entity, or appoint a local distributor, for domestic sales.

Is the tax holiday really 30 years?

It is built in stages, not granted in one block. Royal Decree 38/2025 gives 10 years from the start of activity, renewable for two further periods of the same length. Duqm advertises 30 years renewable for another 30. Renewal is not automatic, so treat the long figure as a ceiling and not a promise.

Which zone has the lowest Omanisation requirement?

OPAZ says rates across its zones run from about 10 to 35 percent. Salalah and Duqm sit at the lower end, while Sohar is commonly published at 15 percent for the first 10 years. Each zone sets and reviews its own rate, so confirm the current figure when you apply.

Do I need a local Omani partner?

No. All three zones permit 100 percent foreign ownership, and Royal Decree 38/2025 confirms that zone capital may be wholly owned by non-Omanis. Since 2019, most mainland activities also allow full foreign ownership, so a partner is rarely required.

How much capital do I need to start?

None of the three zones imposes a minimum share capital. Duqm clearly exempts companies from the minimum capital rule in the commercial companies law. In practice your real commitment is the lease and the investment plan the zone approves, not a share capital figure.