Oman free zones
- Oman has four Free Trade Zones (FTZ) i) Al Mazunah ii) Sohar iii) Salalah and iv) Duqm SEZ;
- Specific free zones benefits include i) 100% foreign ownership, ii) 10 years tax exemption iii) lower quota requirements for Omani workers (10%) and iv) zero customs duties;
- Oman free zones are suitable for foreign companies intending to use Oman as a regional manufacturing and distribution base. Free zones are mainly for import- and export-oriented companies who only require an office in Oman;
- Oman also has nine “Industrial Estates” offering some advantages including i) low rental and energy prices ii) customs duties exemptions and iii) a five-year corporate tax exemption. Knowledge Oasis Muscat allows for 100% foreign ownership for technology companies.
- FZ companies may be 100% foreign owned;
- There are no minimum share capital requirements for free zone business;
- There are no corporate taxes on free zone companies for ten years thanks to a tax holiday incentive;
- No duties are imposed on goods imported and exported from the free zone;
- Oman free trade zone companies are allowed to trade within Oman without a local agent. A customs duty of 5% applies in these cases.
- It is mandatory to rent premises within the free zone;
- At least 10% of the free zone company’s staff must be locals;
- Company licenses are renewable annually after FZ laws are complied with including submitting annual audited financial statements to the free zone authority;
- The free zones in Oman are still under construction and lack many of the conveniences available in the UAE free zones. Customer service is also poor.
Free zone activities allowed include i) importing raw materials ii) manufacturing iii) processing, assembling and packaging iv) exporting finished products v) storing or warehousing products.
- Established in 1999, Al Mazunah offers 100% foreign ownership and 30 years of tax free operations. If a large number of Oman nationals are hired, then this tax holiday may be extended indefinitely;
- Unlike the rest of Oman, where 30% of employees must be Omani nationals, an Al Mazunah company must only hire 10% locals.
- Yemeni citizens working for Al Mazunah companies do not require work permits, which is a great advantage considering that the free zone is located 4km from the Yemeni border in south west Oman;
- Suitable industries include light crafting, commercial sales, and services.
- Salalah opened in 2005 and is still under active development. Once finished with all four phases of development, it will cover an area of 19 square kilometers;
- The free zone is adjacent to the super hub port of Salalah on the main equatorial trade routes;
- The free zone is particularly suitable for chemical and material processing, manufacturing and assembly, and logistics and distribution;
- Licenses offered are for i) general trading, which allows the holder to import, export, distribute and store all goods; ii) specialized trading of defined products, iii) services, and iv) industrial applications, for the import of raw materials, manufacturing of specified products and export of finished products;
- The benefits of this zone include i) 30-year tax holidays on profits and dividends, ii) 0% corporate tax iii) 0% personal income tax iv) no customs or exercise duties.
- The Sohar port free zone is still under development. Once finished it will be 4,500 hectares on the Sohar Port. The port will cluster business into the following industries: i) steel manufacturing and processing, ii) trade and logistics, iii) oil and gas, iv) petrochemicals, v) minerals and aggregates industry, vi) ceramics, vii) food logistics and food processing;
- Licensing can be i) industrial licensing, ii) light manufacturing and assembly, iii) logistics and iv) general trade;
- It will offer 100% foreign ownership and 10 years of tax free operations. If a large number of Oman nationals are hired, then this tax holiday may be extended indefinitely;
- The free zone authorities boast “one-stop-shop” incorporation procedures, shortening business setup to under three weeks, making a Sohar company registration worth considering.
- When completed, the Duqm SEZ will be one of the biggest economic zones in the Middle East, with an area of 1,745 square km;
- The zone area is divided into eight sub-zones aimed at different type of investments, such as i) industry ii) sea port and dry dock iii) tourism iv) fisheries v) logistics, etc.
- The Zone will count with a port and an airport, which will benefit export oriented companies that invest in the area.
Comparison of freezones
|Al Mazunah||Salalah||Sohar||Duqm SEZ|
|License cost||Depends on the license||Depends on the license||Depends on the license||Depends on the license|
|Warehouse space 2000 sq meters||US$2,600||US$2,200||US$2,500||US$3,000|
|Office space availability||Limited||Many||Many||Many|
|Public registrar of companies?||Yes||No||Yes||Yes|
|Open 24 hours a day?||Yes||Yes||Yes||Yes|
|Company shareholders allowed?||Yes||Yes||Yes||Yes|
|Must rent a free zone office?||Yes||Yes||Yes||Yes|
|Incorporation period||4 weeks||4 weeks||4 weeks||4 weeks|
|Shelf companies allowed?||No||No||No||No|
|Minimum directors allowed||1||1||1||1|
|Wholly foreign owned?||Yes||Yes||Yes||Yes|
|Corporate directors allowed?||Yes||Yes||Yes||Yes|
|Oman resident company secretary required?||Yes||Yes||Yes||Yes|
|Can apply for immigration visas?||Yes||Yes||Yes||Yes|
|Type of company||Limited liability||Limited liability||Limited liability||Limited liability|
|Annual audited financial statements?||Yes||Yes||Yes||Yes|
|Annual license renewal?||Yes||Yes||Yes||Yes|
|Healy Consultants fees||US$30,700||US$30,700||US$30,700||US$30,700|
Frequently asked questions
Will I have to hire Omani citizens when I establish an Oman free zone company?Yes. At least 10% of the Omani free zone entity staff must be local hires, although this is lower than on the mainland.
What will be the benefits if I start free zone companies in Oman?Free zone companies offer several benefits including i) 100% foreign ownership ii) no minimum share capital requirements iii) no custom duties on goods entering/leaving the zone and iv) no corporate taxes for 10 years.
How many directors will I be required to appoint in order to register in an Omani FZ?Only 1 director is required for Oman FZ company formation.
How many shareholders are required to incorporate in Oman FZ?Only 1 shareholder is required for starting a free zone business in Oman, whereas other companies in Oman require at least two shareholders.