Last week, His Majesty established by Royal Decree 50/2026 a special economic zone named the Artificial Intelligence Special Zone. With the advancements of AI in our society, the need for this special zone is fundamental. Questions might be asked: What is the legal status of a special zone? How will it be operated? How is this zone different from the recently established International Financial Centre of Oman (IFCO)? We will discuss all this in this blog post.
The Legal Status of a Special Zone
The AI Special Zone is a special economic zone governed by the Law of Special Economic Zones and Free Zones, issued by Royal Decree 38/2025, exactly like the Special Economic Zone at Duqm.
A zone created by virtue of this law is granted specific benefits so that the zone is attractive to foreign investment. For example, companies doing business in the zone get up to thirty years of exemption from corporate income tax, customs exemptions for imported and exported goods, and exemptions from minimum capital requirements. Furthermore, land within the zone is allocated by lease or usufruct outside the constraints of the regular Land Law.
One of the key benefits of the zone will be the creation of a one-stop shop that handles all licensing and permits required for the operation of companies in the zone. The law places a strict deadline for issuing the licences and permits within the zone. For example, labour permits for non-Omani employees must be issued within five working days.
There are also other benefits, like a single comprehensive approval for strategic projects and residency for the owners of the company.
How will it be operated?
The law requires the AI Special Zone to be operated by an operator appointed by the Public Authority for Special Economic Zones and Free Zones. This operator has to be a company. The news outlets have reported that the government has appointed an Omani company called Afouq Investment and Development United to both establish and operate the zone.
How does it differ from IFCO?
One of the biggest announcements of the year was the establishment of the International Financial Centre of Oman, and it’s important to point out the differences between these two projects.
The AI Special Zone provides a number of specific exemptions and benefits, but it is still governed by Omani law. For example, Omanisation rules still apply in the AI Special Zone, the Commercial Companies Law also applies, and Omani courts have full jurisdiction over the zone. In particular, the Omanisation rules prohibit the hiring of non-Omani software engineers, and therefore, this prohibition will apply to companies working in the zone.
Unlike the AI Special Zone, IFCO is a totally independent legal jurisdiction in which Omani law does not apply and has its own court system. This means that the Omanisation rules categorically do not apply.
However, even though the AI Special Zone will still be bound by Omani law, the ability of the zone to attract the AI industry will depend on factors beyond the law, such as its ability to provide infrastructure and services, as well as other facilities that make the zone an attractive destination for the AI industry.
You can learn more about special economic zones, such as the AI Special Zone, by reading the Law of Special Economic Zones and Free Zones in full in English on the link below:
