Oman does not have one universal free-zone regime. Three operating free zones, Duqm, new special economic zones, airport projects, Khazaen and industrial cities differ in legal status, infrastructure and sector focus. This guide separates established regimes from developing sites.
- OPAZ currently identifies three free zones—Sohar, Salalah and Al Mazunah—and three special economic zones—Duqm, Al Dhahirah and Al Rawdah.
- Duqm, Sohar, Salalah and Al Mazunah are VAT Special Zones, but zero-rating depends on the VAT Executive Regulations.
- Royal Decree 10/2022 created airport free zones at Muscat, Sohar and Salalah; operational availability must be checked before committing.
- Any incentive must be supported by legislation, project documents and enterprise status, not a marketing page alone.
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1. The correct map
Royal Decree 38/2025 introduced a unified framework for special economic and free zones. OPAZ supervises those zones and the broader industrial-city system.
Do not treat a free zone, special economic zone, economic city and industrial city as interchangeable. The category affects authority, land, customs, incentives and licensing.
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Free zones: Sohar, Salalah and Al Mazunah.
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Special economic zones: Duqm, Al Dhahirah and Al Rawdah.
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Airport free-zone projects: Muscat, Sohar and Salalah.
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Khazaen and Madayn industrial cities are separate categories and are not automatically VAT Special Zones.
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2. Special Economic Zone at Duqm
Duqm is a large Arabian Sea site combining port, dry dock, industry, logistics, energy, fisheries, tourism and real estate. It fits capital-intensive projects that need land and maritime infrastructure.
OPAZ advertises foreign ownership, capital repatriation, long usufruct and tax exemption subject to the regime. Confirm the project, plot, capex schedule, exclusions, Omanisation and incentive approval.
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Best fit: port logistics, heavy industry, energy, green hydrogen, fisheries, tourism and major real estate.
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VAT: a Special Zone, but zero-rating depends on the transaction and evidence.
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Poor fit: a virtual presence with no economic link to Duqm.
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3. Sohar Free Zone
Sohar combines a deep-water port with a northern industrial cluster and access to UAE and regional routes. Its profile covers logistics, metals, chemicals, manufacturing, clean energy and exports.
OPAZ describes full foreign ownership, customs benefits and a corporate tax holiday of up to 25 years. Duration and conditions should be documented for the specific project.
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Best fit: raw-material imports, production, processing, warehousing and re-export.
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VAT: recognised Special Zone; Articles 101–107 conditions apply.
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Due diligence: port tariffs, utilities, inputs, site, origin and mainland sales.
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4. Salalah Free Zone
Salalah faces Arabian Sea routes connecting Asia, Africa and the Middle East. Its port and airport support logistics, distribution, manufacturing, food processing and southern Oman supply chains.
OPAZ refers to tax exemptions for profits and dividends for up to 30 years, customs benefits and foreign ownership. Confirm commencement, qualifying income, excluded activities and mainland interaction.
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Best fit: transshipment, regional distribution, manufacturing, food/fisheries and East Africa routes.
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VAT: Special Zone; not every service is zero-rated.
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Due diligence: shipping lines, warehousing, utilities, staffing and internal logistics.
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5. Al Mazunah Free Zone
Al Mazunah is positioned at the Yemeni border for cross-border trade, distribution, warehousing, light industry and access towards Yemen and East Africa.
Its official profile lists a 30-year profit exemption, customs advantages, foreign ownership and special Yemeni-workforce arrangements. Sanctions, goods, route and counterparty diligence remain essential.
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Best fit: genuine border trade and logistics.
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VAT: recognised Special Zone subject to conditions.
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Key risk: sanctions, dual-use goods, origin, security and bank appetite.
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6. Al Dhahirah, Al Rawdah and airport zones
Royal Decrees 87/2025 and 88/2025 established Al Dhahirah and Al Rawdah. OPAZ reports first-phase development intended to strengthen Saudi and UAE land corridors.
Royal Decree 10/2022 created airport free zones at Muscat, Sohar and Salalah. OPAZ reports infrastructure progress at Muscat. The decree alone does not prove that every activity, site or incentive is currently available.
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Al Dhahirah: Saudi-border logistics and industry.
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Al Rawdah: Al Buraimi/UAE corridor and first-phase projects.
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Muscat Airport: potential air cargo, logistics and time-sensitive products.
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Sohar/Salalah airport zones: verify operator and availability.
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7. Khazaen and Madayn are useful but different
Khazaen provides a logistics, wholesale, warehousing, food and industrial cluster near Muscat, while Madayn offers industrial sites around Oman.
A mainland industrial site may outperform a free zone for domestic sales. Do not import free-zone tax assumptions into another category.
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Compare proximity to customers, ports, airports and labour.
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Model land, utilities, logistics and Omanisation.
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Confirm VAT Special Zone and income-tax incentive separately.
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8. The four-part tax test
Test income-tax eligibility and duration, qualifying income and activities, customs relief for the goods movement, and VAT zero-rating conditions separately.
The Tax Authority lists Duqm, Sohar, Salalah and Al Mazunah as VAT Special Zones. Goods and services moving within, to or from them may have different treatment; mainland transactions need their own analysis.
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Income-tax exemption: qualifying enterprise and income only.
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VAT zero rate: statutory conditions and evidence.
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Customs: origin, destination and movement.
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Mainland sales: separate tax and customs scenario.
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Pillar Two: top-up tax may offset a zone benefit for a large MNE group.
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9. Selecting the right zone
Start with the supply chain, not the advertised tax holiday. If the project does not use the zone's port, airport, land, infrastructure or geography, artificial substance can cost more than the benefit.
A final investment memo should compare at least two zone routes and one mainland route using the same financial model.
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Activity and licensing.
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Export, zone or mainland customers.
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Port, airport, border and logistics cost.
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Land, utilities, capex and build time.
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Tax, VAT, customs and top-up tax.
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Omanisation, visas and labour.
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Bank, currencies and counterparties.
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Exit, transfer and long-term obligations.