Special Economic Zones in a country are areas or business hubs where economic regulations are different from other areas within the same country. They are established to attract foreign investments, large industrial set ups and also, they are exempted from certain tariffs.

Currently, Oman permits 100% foreign ownership and also exemption of taxes in free zones and special economic zones.

There are three free zones and two special economic zones in Oman which tend to attract large foreign capital and development of infrastructure.

Advantages of free zone companies in Oman:

100% foreign ownership, exemption from corporate taxes, imported and exported goods are exempted from duties, no minimum share capital, trade can be started without a local agent.

Disadvantages:

At least 10% of Omanisation is mandatory, lease physical office premises within free-zone, construction of some free zones is not yet completed.

SOHAR FREE ZONE:

Deep sea port established in 4,500 hectares to attract petrochemicals, ceramics, manufacturing industries. Sohar Free Zone permits 100% foreign company ownership, tax free operations for 10 years but 15% Omanisation of companies is mandatory.

SALALAH FREE ZONE:

Established in 2005 in 19 sq. kms. This zone is suitable for chemical processing, material processing, logistics and distribution and also can benefit from US-Oman free trade agreement. Benefits include 100% foreign ownership, Omanisaton rate of 10%, 0% corporate and personal income tax.

AL-MAZUNAH FREE ZONE:

Al-Mazunah Free Zone is situated close to the Yemeni border. Allows 100% foreign ownership and tax-free operations for 30 years. Here 30% of employees must be nationals of Oman. Suitable for industries like manufacturing, trading and services.

KNOWLEDGE OASIS Muscat SEZ:

Established in 2003, this SEZ mainly focuses on science, IT and knowledge-based industries. The Omanisation starts from 10% increases to 25% over 5 years. Here the minimum share capital is 20,000 OMR. 

DUQM SEZ:

Duqm is one of the largest economic zones spread over 1800 sq. kms in the middle east. Duqm has tax exemption for 30 years and Omanisation of 25%. Aimed to attract investments such as industries, tourism, sea port, dry dock and fisheries.

Whether VAT is applicable on free trade zone and special economic zone in Oman?

Oman recognizes SEZ and free zones according to Article 52 and 54. But it is not clearly known about the details and procedures which The Executive Regulations and Oman tax authority are expected to reveal soon. In case of Bahrain when the procedural aspects were published businesses had only three weeks, we expect the Oman tax authorities will be considerate in allowing business more time. So, it’s better for companies in Oman to have proper understanding of VAT and keep updated about it as VAT registration will commence soon.

You can clarify your queries and get assistance regarding tax structures and tax registration in Oman through ADS INTERNATIONAL AUDITORS.

You register for VAT in Oman through Ads Auditor’s Vat registration in Oman.