Defining the Zones

It is worth noting from the start that the new law does not explicitly define special economic zones or free zones. However, it can be understood from the law that a special economic zone is a wider concept than a free zone as special economic zones can include within them free zones, while free zones cannot include within them special economic zones. Furthermore, special economic zones are direclty managed by OPAZ, while free zones are managed by an operating company that is designed through a concession agreement.

Both special economic zones and free zones offer incentives like tax exemptions, 100% foreign ownership, and simplified administrative processes, making them attractive for industrial, commercial, and recreational projects that contribute to long-term national growth.

Key Functions and Exemptions

Special economic zones and free zones in Oman serve as dynamic investment hubs designed to simplify business operations and increase economic growth. Through a one-stop-shop system, investors benefit from simplified administrative procedures, fast-track permits for non-Omani workers, and an exemption from the minimum capital requirement set under the Commercial Companies Law, etc. Moreover, investors enjoy full protection from nationalisation, seizures, or asset freezing, and have the freedom to transfer profits and capital abroad. Special Economic Zones and Free Zone companies are also exempt from the Commercial Agencies Law, meaning they can engage in trade without requiring a local agent. However, some sectors such as, banks and financial institutions, insurance and reinsurance companies, and telecom service providers, and the like are excluded from income exemptions.

Effects of Legal Shifts

Prior to the issuing of this law, Oman’s special economic zones and free zones operated under separate decrees, and this new law created a unified legal framework that consolidates the regulation of Oman’s special economic zones and free zones.

Overall, this reform transforms Oman’s zoning landscape from a fragmented system into a coordinated national framework. It creates a more predictable environment for investors, improves administrative efficiency, and ensures that both special economic zones and free zones contribute cohesively to Oman’s long-term diversification goals under Oman Vision 2040.

Written by:

Shiyam Al-Harrasi

Shiyam is a Legal Intern at Decree. She has previously interned in international and Omani law firms. She is interested in commercial and corporate law. She holds an LLB from the Leeds Beckett University.