One of the first questions a foreign investor asks is: should I set up in a free zone, an industrial city, or on the mainland? The answer depends on the nature of the project: who your customer is, where your materials come from, and where you will sell. In this guide we present the main options as described by the official bodies, then list what to check before deciding.
The Public Authority for Special Economic Zones and Free Zones (OPAZ) oversees these zones, including the industrial cities operated by Madayn.
Duqm Special Economic Zone
Located on the Arabian Sea coast, it hosts projects in industry, tourism, trade, logistics and real estate development. Incentives listed by OPAZ include 100% foreign ownership, no minimum capital requirement, a 10-year income tax exemption from the start of operations for new projects under the Special Economic Zones and Free Zones Law (Royal Decree 38/2025), extendable for certain activities, with existing projects keeping their earlier exemption periods, free repatriation of capital and profits, and land usufruct agreements of up to 50 years (renewable).
Suits: large projects that need extensive land and proximity to a port, and plan to export or serve the energy, industrial and logistics sectors.
Sohar Free Zone
Established in 2010 next to Sohar Port. OPAZ lists among its incentives: 100% foreign ownership, an income tax exemption for new projects per the periods set by the new law, exemption from import and re-export duties, low capital requirements, a relaxed Omanisation level, and a one-stop shop for procedures.
Suits: export-oriented manufacturing, assembly and trading projects, especially those relying on sea freight.
Salalah Free Zone
Located next to Salalah Port in Dhofar Governorate. Incentives mentioned in OPAZ publications include 100% foreign ownership, no minimum capital requirement, and exemption from import and re-export duties, with a long-term tax exemption whose current length and conditions should be confirmed with the zone's management.
Suits: projects that benefit from shipping lines through Salalah Port, and manufacturing and re-export to regional markets.
Al Mazunah Free Zone
Located in Dhofar Governorate near the Yemeni border and operated by Madayn. OPAZ lists among its incentives 100% foreign ownership, exemption from customs duties, and a tax exemption whose period and conditions follow the new law, so confirm them with the zone administration.
Suits: trade and re-export to the Yemeni market and neighbouring markets.
Industrial cities (Madayn)
Madayn operates fourteen industrial cities in Rusayl, Sohar, Sur, Raysut, Nizwa, Buraimi, Samail, Ibri, Al Mudhaibi, Mahas, Thumrait, Wadi Al Kabir, Suwaiq and Madha. Incentives listed on its OPAZ page include land leases of up to 30 years (renewable), plots serviced with basic utilities, 100% foreign ownership, and customs exemption on production inputs.
Important note: the five-year exemption from tax on net profit is no longer general to all projects. After the 2017 amendments to the Income Tax Law and the 2019 amendments to its executive regulations, this exemption applies only to qualifying manufacturing projects, subject to conditions. Do not build your numbers on it before confirming it applies to your project.
Suits: factories and industrial workshops serving the local market that need ready industrial land close to cities.
A mainland company
The Foreign Capital Investment Law (50/2019) allows 100% foreign ownership in most activities, with a list of activities reserved for Omanis. The company is subject to income tax at the standard rate and to the Omanisation ratios set for its activity. Its main advantage is direct access to the local market and the ability to operate in any city. Suits: restaurants, shops, services and local trade.
Two examples to illustrate
First example: an investor wants a small food factory selling to shops in Muscat. The customer is inside Oman, and the project needs ready industrial land near the capital. Here an industrial city seems closer to the need than a free zone, provided the investor confirms which incentives actually apply.
Second example: an investor imports raw materials and re-exports them after assembly to Gulf and East African markets. Proximity to a port and exemption from import and re-export duties make a free zone next to a port an option worth studying. In both cases, the decision comes from the nature of the project, not from the list of incentives alone.
What to check before deciding
- Where is your customer: inside or outside Oman? Selling from a free zone into the local market may incur customs duties.
- Is your activity permitted in the zone you choose?
- What is the actual length and conditions of the tax exemption for your project? Ask for it in writing.
- What Omanisation ratio applies in the zone and to your activity?
- What is the cost of the land or building and the length of the lease?
- How far is the zone from suppliers, workers and housing?
We help you compare industrial cities, free zones and the mainland option based on your project and its customers.
Contact us nowPublic Authority for Special Economic Zones and Free Zones (OPAZ): Duqm, Sohar and Madayn pages (accessed October 2026) OPAZ: specialised free zones publication, Salalah and Al Mazunah (2021) Special Economic Zones and Free Zones Law, Royal Decree 38/2025 Foreign Capital Investment Law, Royal Decree 50/2019 Income Tax Law amendments, Royal Decree 9/2017, and Ministerial Decision 14/2019