Oman free zones

Oman free zones

Oman free trade zones corporate services

  1. Oman has four Free Trade Zones (FTZ) i) Al Mazunah ii) Sohar iii) Salalah and iv) Duqm SEZ;
  2. 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;
  3. 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;
  4. 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.

Advantages

  1. FZ companies may be 100% foreign owned;
  2. There are no minimum share capital requirements for free zone business;
  3. There are no corporate taxes on free zone companies for ten years thanks to a tax holiday incentive;
  4. No duties are imposed on goods imported and exported from the free zone;
  5. Oman free trade zone companies are allowed to trade within Oman without a local agent. A customs duty of 5% applies in these cases.

Disadvantages

  1. It is mandatory to rent premises within the free zone;
  2. At least 10% of the free zone company’s staff must be locals;
  3. Company licenses are renewable annually after FZ laws are complied with including submitting annual audited financial statements to the free zone authority;
  4. 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.

Commercial considerations

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.

Al Mazunah

  1. 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;
  2. Unlike the rest of Oman, where 30% of employees must be Omani nationals, an Al Mazunah company must only hire 10% locals.
  3. 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;
  4. Suitable industries include light crafting, commercial sales, and services.

Salalah

  1. 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;
  2. The free zone is adjacent to the super hub port of Salalah on the main equatorial trade routes;
  3. The free zone is particularly suitable for chemical and material processing, manufacturing and assembly, and logistics and distribution;
  4. 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;
  5. 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.

Sohar

  1. 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;
  2. Licensing can be i) industrial licensing, ii) light manufacturing and assembly, iii) logistics and iv) general trade;
  3. 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;
  4. The free zone authorities boast “one-stop-shop” incorporation procedures, shortening business setup to under three weeks, making a Sohar company registration worth considering.

Duqm SEZ

  1. 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;
  2. 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.
  3. The Zone will count with a port and an airport, which will benefit export oriented companies that invest in the area.

Comparison of freezones

Oman Free Trade ZonesAl Mazunah FZSalalah FZSohar FZDuqm SEZ
Summary    
Area covered by the free zone?4.5 sq. km6 sq. km45 sq. km25 sq. km
Most popular business sector in the zone?Light industriesManufacturing and logisticsPetrochemicals and logisticsLight industries and logistics
Our Clients can setup a WFOE in the zone?YesYesYesYes
Bonded warehouses available?YesYesYesYes
Can hire foreign workers?YesYesYesYes
Can secure offshore corporate finance?YesYesYesYes
Can a FTZ company freely remit money abroad?YesYesYesYes
Can trade with other parts of Oman?YesYesYesYes
Time zone? (ahead of GMT)+4 hours+4 hours+4 hours+4 hours
Is there an airport nearby?YesYesYesYes
Company registration    
Can the company be incorporated online?NoNoNoNo
How long to setup the company?6 weeks6 weeks6 weeks6 weeks
How long to secure the business license?4 weeks4 weeks4 weeks4 weeks
Foreign investor approval required?YesYesYesYes
Client must travel to Oman for company registration?NoNoNoNo
Minimum statutory paid up capital requirement?20% of initial investment20% of initial investment20% of initial investment20% of initial investment
Logistics considerations    
Physical office space required for new companies?YesYesYesYes
Quality of utilities?ExcellentExcellentExcellentExcellent
Average annual industrial space rental per 1000sq. m.?US$2,650US$2,300US$2,750US$3,100
Average annual warehouse space rental per 1000 sq. m.?US$2,600US$2,200US$2,500US$3,000
Attractive for setting up a manufacturing business?Yes (light manufacturing)Yes (manufacturing & assembly)Yes (light manufacturing)Yes (light manufacturing)
Quality of Wi-Fi?GoodGoodGoodGood
Average monthly electricity prices? (per Kwh)US$0.026US$0.025US$0.03US$0.026
Proximity of sea port in kilometres?260km5km10km9km
Proximity of airport in kilometres?260km18km25km20km
Accounting and tax considerations 
Corporate tax rate (%)?0%0%0%0%
Goods subject to custom duties within the zone?NoNoNoNo
VAT imposed on transactions within the zone?NoNoNoNo
VAT imposed on goods sold in the mainland from 2018?5%5%5%5%
Tax incentives for manufacturing start-ups?YesYesYesYes
Quarterly tax filing required?NoNoNoNo
Annual tax returns to be submitted?YesYesYesYes
Annual government inspection required?YesYesYesYes
Annual audit required?YesYesYesYes
Access to double taxation avoidance agreements?YesYesYesYes
Corporate banking and financial considerations 
Recommended bank for corporate banking?National BankHSBCOman Arab BankBank Muscat
How long to setup the bank account?4 weeks4 weeks4 weeks4 weeks
Corporate visa debit cards available?YesYesYesYes
Quality of e-banking platform?GoodVery GoodGoodGood
English e-banking platform available?YesYesYesYes
Can companies make overseas payments in OR/USD?YesYesYesYes
Can companies secure loans within the zone?YesYesYesYes
Can secures loans from mainland Oman banks?YesYesYesYes
Access to Private Equity/VC funds?YesYesYesYes
Can the company list on the Muscat securities market?YesYesYesYes
Labour considerations 
Can hire foreign employees?YesYesYesYes
How long to secure the work permit?4 weeks5 weeks4 weeks6 weeks
Client must travel before securing a work permit?YesYesYesYes
Can investors secure a permanent residency?YesYesYesYes
Average monthly salary for local employees?US$4,000US$4,000US$4,000US$4,000


Frequently asked questions

Contact us

For additional information on our free trade zones company services in Oman, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar