Oman is undergoing a strategic economic transformation, and at the heart of this change is a unified, highly competitive framework for foreign investors. The recent issuance of the Royal Decree No. 38/2025 (RD 38/2025), governing Special Economic Zones (SEZs) and Free Zones (FZs), has solidified Oman’s position as a premier global investment destination.

For businesses focused on long-term profitability, the most compelling incentive is the potential to secure a 30-year corporate tax holiday.

This guide breaks down the new law, the path to a 30-year exemption, and the core benefits available in Oman’s key investment hubs: Duqm, Salalah, and Sohar.

The Game Changer: Royal Decree No. 38/2025

The New Law of Special Economic Zones and Free Zones (RD 38/2025), which became effective in April 2025, replaces a fragmented system with a single, clear framework under the supervision of the Public Authority for Special Economic Zones and Free Zones (OPAZ).

The key highlight for investors is the new, harmonized tax incentive structure:

Tax Incentive	Provision under RD 38/2025
Initial Tax Exemption	10-year exemption from corporate income tax (CIT) from the start date of commercial operations.
Long-Term Extension	Possibility of two additional extensions, each for a period of 10 years, for a potential total tax holiday of 30 years.
Eligibility	The extensions are reserved for “activities of a special nature,” which will be defined in the forthcoming Executive Regulations (ERs). These are expected to target strategic, high-value, and job-creating projects.
Exclusions	The CIT exemption does not apply to banks, financial institutions, insurance/reinsurance companies, telecommunication companies, construction companies, and land/maritime transportation companies.

This move provides new investors with regulatory certainty and a clear path to one of the most generous long-term tax incentives in the region.

The Power of Zero: Core Incentives for All SEZ/FZ Companies

Beyond the corporate tax holiday, establishing a company in an OPAZ-governed zone grants a powerful suite of fundamental business benefits:

100% Foreign Ownership: Complete foreign control over your company without the need for a local Omani partner.
Customs & Duties Exemption: Full exemption from customs duties on all imports and exports of goods, equipment, and raw materials into and out of the Free Zone.
No VAT on Zone-to-Zone Trade: Goods and services supplied within, or between, the designated zones are generally zero-rated or out-of-scope for the 5% VAT.
Full Repatriation of Capital and Profits: Investors are free to remit 100% of their capital and profits outside of Oman.
No Personal Income Tax: Oman continues to have zero personal income tax on salaries and wages.
No Minimum Capital Requirement: Most Free Zones waive the minimum share capital requirement, simplifying the setup process.

Your Gateway to the World: Key Free Zones and Their Specializations

Oman’s SEZs and FZs are strategically positioned to leverage the country’s world-class ports and global trade routes:

1. Duqm Special Economic Zone (SEZAD)

Total Tax Holiday: Up to 30 years.
Specialization: Heavy and Light Industries, Logistics, Petrochemicals, Oil Terminal, Fisheries, and Tourism. It is one of the largest SEZs in the MENA region, offering long-term Usufruct agreements (up to 50 years, renewable) for land use, perfect for large-scale industrial projects.
Omanisation Rate: Relaxed rate of 25%.

2. Salalah Free Zone (SFZ)

Total Tax Holiday: Up to 30 years.
Specialization: Chemical and Material Processing, Manufacturing & Assembly, and Logistics & Distribution. SFZ benefits from a deep-sea port and offers access to the U.S.-Oman Free Trade Agreement.
Omanisation Rate: Highly relaxed rate of 10%.

3. Sohar Free Zone (SFZ)

Initial Tax Holiday: Up to 10 years (with a path to extensions).
Specialization: Logistics, Steel Manufacturing, Petrochemicals, Oil & Gas, and Food Processing. Located next to the Port of Sohar, this zone is a hub for trade, re-export, and industry.
Omanisation Rate: Reduced rate of 15% (linked to the tax exemption period).

How to Secure the 30-Year Corporate Tax Exemption

For new investors, the path to a tax-exempt status is now streamlined through the one-stop-shop approach mandated by OPAZ.

Company Registration: Register your legal entity (LLC, Branch, etc.) through the one-stop-shop in your chosen Free Zone (e.g., Duqm, Salalah, Sohar).
Activity Licensing: Obtain the necessary license (Industrial, Commercial, or Service) for your specific business activity.
Apply for Exemption: Submit the formal application for tax exemption to the relevant Zone Authority (OPAZ/Duqm Authority). The initial 10-year exemption is typically granted upon the start of commercial operations.
Qualify for Extension: To receive the extensions (up to the maximum of 30 years), your company must meet the criteria for “activities of a special nature” as outlined in the future Executive Regulations. This usually involves demonstrating significant investment, high Omani employment, or contribution to strategic economic sectors (e.g., Green Hydrogen, high-tech manufacturing).

Conclusion: Your Strategic Investment Starts Now

The New Law (RD 38/2025) is a bold statement from the Sultanate of Oman, unifying incentives and providing a long-term, low-tax environment that is essential for capital-intensive global projects.

For investors seeking a secure, strategically-located, and fiscally advantageous base in the Middle East, the 30-year Oman Free Zone Corporate Tax Exemption is the single most compelling reason to start a business in Duqm, Salalah, or Sohar today.

Disclaimer: This blog provides general information and does not constitute legal or tax advice. Investors should consult with a qualified tax advisor to confirm their eligibility for exemptions and the specific requirements under the new Royal Decree No. 38/2025, particularly regarding the forthcoming Executive Regulations.

Oman Free Zone Corporate Tax Exemption: New 30-Year Law & SEZ Benefits