Oman’s New Special Economic Zones and Free Zones Law: Implications for Investors

Oman’s Royal Decree 38/2025 establishes an updated framework for special economic zones (SEZs) and free zones (FZs). This article analyzes the Decree’s principal features on tax incentives, land use, and customs facilitation while assessing what it means for investors and comparing it with the nation’s previous framework.

Oman is rapidly establishing itself as a desirable investment destination in the Gulf, due to its strategic placement on major international trade routes, modern infrastructure, and pro-business changes. The government has progressively built its reputation for stability and openness, aided by Oman Vision 2040, which promotes diversification of the economy beyond fossil fuels.

A key aspect of this approach has been the establishment of special economic zones (SEZs) and free zones (FZs), which are intended to draw international investments into logistics, manufacturing, renewable energy, and technology. In April 2025, Oman issued Royal Decree 38/2025 (hereinafter, the “Decree”), which established the new Law of SEZs and FZs.

This article looks at the key provisions of the new Decree, such as tax exemptions, customs facilitation, investor protections, and real estate ownership rights, comparing them to previous frameworks like the Duqm SEZ Law.

Key incentives and exemptions introduced with the new Decree

The new decree introduces several key incentives for businesses operating in Oman’s SEZs and free zones. These include, among others, tax exemptions, customs relief, and simplified licensing processes, which will lower operational costs, enhance competitiveness, and stimulate long-term economic activity.

• Corporate Income Tax (CIT) relief: According to EY, eligible businesses will benefit from a 10-year income tax exemption, which can be renewed twice, totalling up to 30 years, for activities considered of special significance
• Customs and excise relief: Goods exported, imported, or re-exported via SEZs and free zones will receive customs duty exemptions, hence decreasing expenses for manufacturing and logistical investors.
• Valued Added Tax (VAT) exemptions: Specific activities, notably in education, healthcare, financial services, and exports, maintain VAT exemptions or zero-rating, which makes the zones especially beneficial for enterprises in these sectors.
• Operational streamlining: The Decree streamlines therefore accelerates the procedure for approvals, permits, and licenses, establishing a more predictable and efficient regulatory framework for investors.

Customs and trade facilitation

A fundamental characteristic of this new framework is the classification of SEZs and FZs as external to Oman’s customs area. Goods imported into the zones are exempt from standard customs procedures and charges until they penetrate the domestic market. Enterprises functioning in these regions benefit from complete exemptions from customs tariffs on imports, exports, and re-exports, rendering them highly competitive for manufacturing, assembly, and re-export activities.

The Decree prioritises faster clearance procedures, incorporating electronic trade facilitation technology to diminish administrative delays and expenses for investors. These optimised methods are especially crucial for industries dependent on just-in-time supply chains, including logistics, automotive, and sophisticated manufacturing.

Additionally, the zones are interconnected with Oman’s principal logistics centres (Sohar Port, Salalah Port, and Duqm SEZ), facilitating seamless multimodal connection via maritime, aerial, and terrestrial routes. This enhances Oman’s position as a regional trade and transshipment centre.

Real estate and land ownership

The Decree enhances clarity and flexibility regarding real estate and land ownership in SEZs and free zones, which is crucial for industrial and commercial investors. Developers and operators in these zones may lease land directly from the authority, typically under long-term agreements lasting up to 50 years, which provides safeguards for large-scale infrastructure and capital-intensive projects.

Foreign investors gain advantages through the possession of usufruct rights and long-term leases, which substantially improve project bankability and facilitate financing. Companies may obtain ownership rights for specific plots, contingent upon approval from the relevant authority, especially in the context of strategic industries.

The provisions aim to support manufacturing and logistics operations, as well as ancillary services including warehousing, offices, hospitality, and commercial retail within SEZs and free zones, thus fostering integrated investment ecosystems that extend beyond single-sector activities.

Implications for local and foreign investors

Foreign investors

For foreign investors, the implications are more strategic. The consolidation of rules across all zones eliminates the fragmentation that previously complicated investment decisions. Predictable tax exemptions, full customs relief, and secure land-use rights enhance Oman’s competitiveness compared with regional peers. More importantly, the integration of SEZs with national infrastructure hubs transforms Oman into a credible platform for regional and international supply chains. For global companies assessing Gulf markets, Oman now offers not only incentives but also a more coherent and scalable operating environment.

Local investors

For local investors, the law provides a clearer pathway to participate in large-scale projects, either as primary operators or as suppliers within extended value chains. The certainty of long-term land tenure and streamlined licensing processes reduces operational risks, allowing Omani businesses to plan with greater confidence. Crucially, local firms gain access to foreign capital and technology through joint ventures, positioning them as beneficiaries of knowledge transfer and industry upscaling.

Wider market impact

The new legislation carries implications beyond the investor community, shaping the broader market environment. By unifying SEZs and free zones under one law, Oman strengthens its reputation for regulatory coherence, a factor often highlighted by international ratings agencies and trade partners when evaluating market attractiveness. This coherence reduces transaction costs for multinational firms and creates positive spillovers for small and medium enterprises in Oman that will supply or service zone-based industries.

The framework also enhances Oman’s logistical competitiveness, aligning with global supply chain restructuring in a post-pandemic and increasingly multipolar trading system. As manufacturing and logistics firms seek diversification away from single-country dependencies, Oman is better positioned to capture a share of investment previously directed towards more established Gulf hubs. Over the medium term, this could stimulate greater non-oil exports, expand employment opportunities for the domestic workforce, and elevate Oman’s status within regional economic corridors.

Comparison with previous frameworks

The new law consolidates and replaces earlier frameworks, notably:

(The Free Zones Law, which set out the original free zone structure but had limited uniformity and transparency; and

• The Duqm SEZ framework, which provided generous incentives (up to 30 years’ tax holiday, full foreign ownership, duty exemptions), operated largely as a standalone regime.

By unifying these approaches, the new Decree establishes a single, comprehensive framework for SEZs and free zones across the country, giving investors more certainty.

Outlook

Oman’s new Decree introduces long-term tax holidays, customs and VAT relief, streamlined approvals, and more transparent land use rules. For international investors, the framework offers stronger incentives, operational clarity, and a unified regime across Oman’s zones. Compared with the older patchwork of laws, the decree modernises the landscape and is likely to boost Oman’s appeal as a stable and competitive Gulf investment destination.

Also read: New Oman Golden Visa Offers 10-Year Residency for Investors

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