Oman's free zones in 2026: what the new rules change.

Oman's free zone regime has been in the middle of being replaced for well over a year. The law changed in April 2025; the regulations that explain how it operates arrived only in September 2026. Much of what is written online describes neither, and the gap between them is where the commercial risk sits.

1. What Royal Decree 38/2025 changed

Royal Decree 38/2025 came into force on 8 April 2025. It repealed the Free Zones Law of 2002 and replaced the old split treatment with a single law covering both special economic zones and free zones. The substance is modern:

• Ownership. A zone operator, zone enterprise or real-estate developer may be wholly foreign-owned. No local partner, no ceiling.
• Capital. The zone authority may waive capital requirements by board decision. That is a discretion, so it is negotiated rather than claimed.
• Income tax. Exemption for ten years from the start of activity, renewable twice, so thirty years at most. Banks, financial institutions, insurers, telecoms, construction and transport are excluded entirely. If your activity is one of those six, the tax case for a zone is nil.
• Customs. Exemption on equipment, machinery, spare parts and raw materials, with no duty on exports.
• Residency. Rights for non-Omani investors and property owners within the zones.
• Land. Granted by lease and usufruct, outside the ordinary land law. That is how zones sidestep the restriction on foreign freehold.

2. The September 2026 Executive Regulations

The law gave itself one year to produce Executive Regulations. That deadline passed in April 2026 with drafts still under review, which left investors with headline terms and no operating rules. On 20 September 2026 the Public Authority for Special Economic Zones and Free Zones (OPAZ) issued them as Regulation 81/2026. As published, they cover:

• A one-stop shop as the main channel for land and property allocation, licences, approvals, permits and certificates, linked electronically to the other authorities.
• Automatic licensing once automated checks confirm the data and documents are complete, and automatic renewal where the licensee's data is current.
• Set decision timeframes for certain applications, a duty to give reasons for a rejection, and a grievance route.
• Criteria for strategic projects, which can receive tailored facilitation.
• Real-estate development rules: project licensing, off-plan sales, freehold ownership by non-Omanis in applicable projects, and escrow accounts for buyers' funds.

That is real progress. It does not remove the need to confirm your own terms. The regulations set the machinery; the zone authority still decides the specifics for your activity.

3. The thirty-year tax holiday is the old regime

You will still read that Oman's zones offer thirty- or twenty-five-year tax holidays. Those terms belong to the legacy cohort: businesses established before April 2025 keep their existing incentives until their agreements expire. New entrants get ten years, renewable twice. Confusing the two is the most common error in current writing about Omani zones.

Two practical consequences. If you are buying an existing zone business, you are buying its agreement and remaining term, which may be worth more than a new licence. If you are negotiating fresh, legacy terms are the ceiling of what has been given before, not what you will be offered. And note that the zone Omanisation percentages of 15% to 25% are contractual floors, higher than the mainland baseline of one Omani per commercial registration.

4. The question that catches traders

This is the mistake that costs the most money, and trading companies make it, not manufacturers.

Free zone access to the Omani domestic market is not automatic. A zone licence lets you operate inside the zone. It does not, by itself, let you sell into mainland Oman on the same basis as a mainland company. Whether and how you reach local customers depends on the origin of the goods, the zone, the licensed activity, the goods themselves and the distribution rules that apply to them. Goods entering the Omani market from a zone pay customs duty and import VAT at that point.

A manufacturer shipping containers from Salalah to East Africa never meets the question. A trader who chose a zone for its tax terms, intending to supply Omani customers, meets it immediately, often after the lease is signed. If domestic sales are a material part of your plan, get the mainland access position confirmed in writing before anything else, and treat an evasive answer as a no.

5. What a zone actually costs

Zone licence fees, land lease rates and service charges are set by each zone authority, negotiated case by case, and not reliably published. In practice a zone licence is issued only once you hold a signed lease for an office, flexi-desk or warehouse, usually for at least a year and paid in advance. That lease is a real year-one cost and is rarely shown in setup price lists.

6. Should you be in a zone at all?

For most foreign SMEs, no, and it is worth being direct about why. Zone incentives are weighted towards capital-intensive, export-oriented businesses that move goods. Customs exemption on machinery and raw materials is worth a great deal to a manufacturer and almost nothing to a consultancy. The tax exemption is worth ten years of 15% on profits you have to make first, which for a services business in its first three years is often smaller than the founder imagines.

Meanwhile the zones sit in Salalah, Sohar, Duqm and Al Mazunah rather than in Muscat, where your customers, your bank and your advisers are. A zone earns its place if you are moving physical goods at volume, particularly for export, or building something capital-intensive with an anchor customer already identified.

If you are selling services, selling to Omani customers, or running a lean operation whose main cost is people rather than plant, a mainland SPC or LLC in Muscat is almost always the better vehicle. Choosing the mainland is not settling for less. It is declining to pay a location premium for incentives your business cannot convert into cash.

Frequently asked

How long is the free zone tax exemption in Oman?

For businesses established under Royal Decree 38/2025, income tax is exempt for ten years from the start of activity, renewable twice, so up to thirty years. Banks, financial institutions, insurers, telecoms, construction and transport are excluded. The longer holidays you may read about apply to zone businesses established before April 2025.

Have the Executive Regulations for Oman's free zones been issued?

Yes. OPAZ issued them as Regulation 81/2026 in September 2026. They introduce a one-stop shop, automatic licensing and renewal where checks are passed, set decision timeframes and rules for real-estate development in the zones.

Can a free zone company sell to customers in mainland Oman?

Not automatically. Access to the domestic market depends on the origin of the goods, the zone, the activity and the distribution rules, and customs duty and VAT apply when goods enter the Omani market. Get the position confirmed in writing before you sign a lease.

Do I need an office to get a free zone licence in Oman?

In practice, yes. A zone licence is normally issued only against a signed lease for an office, flexi-desk or warehouse, typically for at least a year and paid in advance.

Is a free zone better than a mainland company for a services business?

Usually not. A services business selling to Omani customers is generally better served by a mainland SPC or LLC in Muscat, closer to clients and banks and without the zone's lease and Omanisation commitments.