Free Zone Tax Incentives

Source: Royal Decree No. 47/2017 (Income Tax Law); Free Zone Authority regulations; Special Economic Zone at Duqm (SEZAD) regulations

Written in plain language for general understanding. This is educational content, not legal advice. Based on Omani royal decrees, ministerial decisions, and the Basic Statute of the State.

Omani National Law

What is this right?

Oman offers attractive tax incentives for businesses operating in designated free zones and special economic zones:

  • Income tax exemptions: Businesses in free zones may be exempt from income tax for up to 30 years, depending on the zone and activity.
  • Customs duty exemptions: Goods imported into free zones are generally exempt from customs duties.
  • 100% foreign ownership: Free zones allow full foreign ownership without an Omani partner.
  • Key zones: Sohar Free Zone, Salalah Free Zone, Al Mazunah Free Zone, and the Special Economic Zone at Duqm (SEZAD) are the main zones.
  • VAT: Free zone businesses may still be subject to VAT depending on the nature of their sales.

When does it apply?

  • You are considering establishing a business in one of Oman's free zones.
  • You are an existing free zone business wanting to understand your tax obligations and benefits.
  • You are a foreign investor looking for a tax-efficient base in the Gulf region.

What should you do?

  • Research the specific incentives offered by each free zone — they vary by zone and activity.
  • Apply to the relevant Free Zone Authority for a licence and confirm your tax exemption status.
  • Maintain compliance with free zone regulations to keep your tax benefits — report to the zone authority as required.
  • Consult a tax adviser to structure your operations for maximum benefit within the law.

What should you NOT do?

  • Do not assume automatic tax exemption — you must apply and meet the zone's conditions.
  • Do not sell into the Oman domestic market from a free zone without understanding the duty and VAT implications.
  • Do not ignore reporting requirements — free zone businesses must still comply with zone regulations and audits.

More in Tax Rights

Corporate Income TaxOman levies a corporate income tax on business profits:Tax rate: A flat rate of 15% on taxable income for all companies ...Read more →No Personal Income TaxOne of Oman's most important tax features is the absence of personal income tax:No tax on salaries: Individuals do not p...Read more →VAT ObligationsOman introduced a Value Added Tax (VAT) in April 2021:Standard rate: 5% on most goods and services.Zero-rated items: Cer...Read more →

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