Oman Royal Decree 38/2025 — Law of Special Economic Zones and Free Zones (OPAZ unified SEZ/FZ statutory framework)
Industrial policy↑ Liberalising~🇴🇲 OM · Sultanate of Oman — Sultan Haitham bin Tariq (administered by Public Authority for Special Economic Zones and Free Zones, OPAZ)✎ 2026-05-20
announced 7 Apr 2025
effective 13 Apr 2025
Status
effective 13 Apr 2025 · stage not filed
Sourcing
🟢 primary-OJ 1 primary
🇴🇲 OM issued this industrial policy measure, touching manufacturing, logistics, green-hydrogen and 2 more sectors. It reads as liberalising.
RBI 3📌 stable
Sultan Haitham bin Tariq issued Royal Decree 38/2025 on 7 April 2025, published in the Sultanate of Oman Official Gazette on 13 April 2025, enacting a unified statutory framework for Oman's special economic zones (SEZs) and free zones (FZs) under the Public Authority for Special Economic Zones and Free Zones (OPAZ). The law consolidates the previously fragmented regimes governing Duqm SEZ, Salalah Free Zone, Sohar Free Zone, Al Mazunah Free Zone, and Knowledge Oasis Muscat into a single overarching statutory architecture, granting a 10-year corporate income tax exemption (renewable for high-value activities), 100% foreign ownership, full capital and profit repatriation, customs-duty exemptions on construction inputs and operational goods, and a statutory one-stop-shop through OPAZ. The law establishes OPAZ as the consolidated regulatory authority with ring-fenced powers over labour, immigration, customs, environment, and land-use within zone boundaries, and creates a new statutory basis for OPAZ to negotiate sector-specific concessions using usufruct, leasehold, and sub-concession instruments. Royal Decree 38/2025 is the principal Vision 2040 FDI-architecture instrument — the parent statute under which the GFCL Salalah LFP battery-materials usufruct, the Hyport Duqm green-ammonia project, and the Karwa Motors EV-assembly arrangement all operate.
Analyst notesShowHide
Mechanism
Royal Decree 38/2025 replaces approximately six previous zone-specific statutes (including the Law of Free Zones issued by RD 56/2002) with a single overarching statute covering all of Oman's SEZs and FZs under OPAZ authority. The structural logic is consolidation-plus-standardisation: previously each zone had its own enabling instrument with slightly different incentive schedules and governance arrangements; the new law homogenises the core benefit package while preserving OPAZ's power to negotiate sector-specific concessions zone by zone.
Core incentive architecture:
- Tax exemption: 10-year CIT exemption from commencement of operations, renewable for activities of "special nature" (high added value, innovation, or strategic). Excludes banks, insurance, telecom, contracting, and road/maritime transport.
- Customs: Construction inputs and operational goods are customs-duty free within zones; exported goods face no outward duty. Temporary admission of goods for repair or manufacture is permitted.
- Ownership: 100% non-Omani ownership permitted; full repatriation of capital and profits; non-Omani freehold ownership permitted for real estate units within zones.
- One-stop-shop: OPAZ operates a single window for licensing, permitting, visa issuance, and utility connections.
- Governance: Zone-management committees with statutory ring-fenced authority over labour, immigration, customs, environment, and land use inside each zone perimeter.
- Concession instruments: Usufruct rights + leasehold + sub-concession for land allocation to anchor investors.
Executive Regulation: The decree requires OPAZ to issue an Executive Regulation within one year of gazette publication (i.e., by April 2026), detailing implementation rules.
Why severity 3
Severity 3 reflects the architectural scope rather than any single transaction: this is the first unified SEZ/FZ statute in Oman's modern investment-promotion history, replacing ~6 fragmented zone-specific decrees. It is the statutory underpinning of Vision 2040's entire SEZ/FZ deal-flow, covering green hydrogen (Duqm), downstream petrochemicals (Sohar), critical-minerals beneficiation (Salalah), and logistics (Al Mazunah/Salalah port). The homogenised incentive package and consolidated OPAZ governance also represent a deliberate competitive response to UAE ADGM/JAFZA legislative improvements, Saudi Arabia's 2023 SEZ Law, Qatar QFC Law, and Bahrain Decision 53/2024 — the GCC peer-set race for FDI is now fully codified.
Downstream implications
- Provides statutory certainty for the GFCL Salalah LFP battery-materials plant (filed: 2025-09-14-oman-opaz-salalah-free-zone-lfp-battery-materials-plant) — the usufruct arrangement now has an explicit legislative basis rather than relying on zone-specific regulatory instruments.
- Enables OPAZ to directly negotiate and grant sector-specific concessions for green hydrogen, mining-beneficiation, and downstream petrochemicals without requiring separate enabling legislation per project.
- The exclusion of banks, telecom, and contracting from the tax-exemption perimeter is structurally important: Oman is not competing for financial-services FDI (that space is Qatar QFC / Dubai DIFC), but for manufacturing, logistics, and energy-transition industrial anchors.
- Watch for the Executive Regulation (due by April 2026) — it will set the eligibility criteria, performance thresholds for renewal, and sector-specific premium schedules that will determine how competitive Duqm and Salalah are relative to NEOM/KAEC (Saudi) and Khalifa Industrial Zone (Abu Dhabi).
Open questions
- Whether the Executive Regulation introduced sector-specific incentive tiers (e.g., a green-hydrogen premium or critical-minerals processing bonus) analogous to Morocco's territorial/sectoral premium structure.
- Whether Omanisation (workforce localisation) quotas are suspended inside zones for a defined period, or simply subject to OPAZ discretion — the decree refers to "defined period" exemptions but the quantum is left to the Executive Regulation.
- Whether Royal Decree 39/2026 (which cites RD 38/2025 in its preamble, per the OPAZ legislation page) amends or supplements the parent law — worth checking when that decree's text is publicly available.