On 7 April 2025, the Sultanate of Oman issued Royal Decree (“RD”) No. 38/2025 (“New Law”) promulgating the law for the Special Economic Zones (“SEZs”) and Free Zones (“FZs”), collectively referred to as “Zones”. The New Law replaces the law previously issued under RD 56/2002 for FZs and under RD 119/2011 for Duqm SEZ. The New Law introduces the legal and regulatory framework applicable to Zones operating under the supervision of the Public Authority for SEZs and FZs (“OPAZ”). The New Law was published in the official gazette on 13 April 2025 and is effective from the date of publication.
The New Law aims to enhance legal certainty, streamline licensing and administrative procedures. It enhances the competitiveness of Oman’s investment zones by providing a harmonized regime of incentives and protection to investors who have set up or intend to set up operations in the Zones.
The Executive Regulations (“ERs”) under the New Law is expected to be issued within one year of the issue of the New Law. The ERs will provide further guidance on operational implementation.
Legal statute
RD 38/2025 introduces a framework that applies to SEZs and FZs, replacing RD 56/2002 along with any other legally contradicting provisions to the New Law.
Key highlights of the New Law
Topic |
Summary |
Licensing system |
A digital one-stop shop is introduced for centralized processing of licenses, permits, and service delivery. |
Foreign ownership |
100% foreign ownership will be permitted to operators, enterprises and real estate developers. Further, enterprises and real estate developers are exempted from a minimum capital requirement, subject to approvals. |
Tax incentives |
There is a 10-year exemption from income tax from the date of commercial operations, with a possibility of extension for two (2) additional periods for activities of a special nature (to be specified in the ERs), subject to approvals. Exemption will not be available to banks, financial institutions, insurance and reinsurance companies, telecommunication companies, construction companies, and land and maritime transportation companies. |
Customs |
A customs directorate is to be set up within each SEZ to oversee the movement of goods. Goods imported into or exported from the Zones will not be subject to Customs duties. |
Real estate development |
Real estate developers are permitted to sell project units to non-Omanis (natural and legal persons) under the freehold system and the creation of gated communities (conditions and rules to be specified in the ERs). |
Residency rights and work permits |
A branch of the Directorate General of Passports and Civil Status (immigration office) is to be established in the SEZ for on-site issuance of visas, permits, and clearance to non-Omanis. |
Transitional provisions |
Current incentives, permits, and approvals remain unaffected for existing operators and enterprises in the Zones until the expiry of their respective operations periods, in accordance with the legislation and their existing agreements. |
With the issuance of the New Law, businesses operating or intending to set up their operations within SEZs or FZs should assess the potential impact of the New Law on their operations, investment strategy, and eligibility for incentives. It is also important to monitor the issuance of the ERs, which will clarify implementation timelines, transitional rules, and qualifying conditions in this regard.
KPMG has a dedicated team of experienced tax specialists based in Oman, supported by a wider regional network with deep expertise in SEZs and FZs regulations and tax advisory services. For a tailored discussion on how the New Law may impact your business, please reach out to your advisors at KPMG or the contacts mentioned below.