MUSCAT, SEPT 20
Oman has set RO 10 million as the general minimum investment threshold for a project to be treated as strategic in special economic zones and free zones, while defining qualifying sectors, potential incentives and licensing deadlines under the Executive Regulation of the Law of Special Economic Zones and Free Zones, issued by Royal Decree 38/2025.
A project is considered strategic, and may be granted a single approval, if it meets the investment threshold and contributes to at least one of four areas: transfer of knowledge and modern technology, enhancement of local content, greater self-sufficiency or economic security, or growth in Oman’s annual exports.
In all cases, the project must also fall within investment fields identified by the board of the Public Authority for Special Economic Zones and Free Zones (OPAZ) in light of approved national plans and strategies.
The OPAZ board may waive the RO 10 million threshold where the nature or strategic importance of a project warrants an exception.
Strategic projects may also receive additional incentives by decision of the Council of Ministers, based on a proposal from the OPAZ board.
These may include exemption from land rent or usufruct charges for up to 10 years from the start of actual operations, exemption from prescribed Omanisation ratios for up to four years from the same date, full or partial exemption from fees, and other advantages proposed by the board according to the nature of the project.
The regulation also identifies for the first time the activities considered to be of a “special nature” for the purposes of extending income-tax exemptions.
They include heavy manufacturing such as petrochemicals, metals and basic metal industries; green industries covered by national clean-energy transition and net-zero carbon plans, including renewable energy, green hydrogen and its derivatives; port logistics and cargo handling; advanced technology, data centres, artificial intelligence and innovation; strategic infrastructure; food-security projects; pharmaceuticals, medical and biotechnology projects; and recycling.
Under the 2025 law, enterprises and operators are exempt from taxes imposed under the Income Tax Law for 10 years from the date activity begins, with the exemption capable of being extended for two further 10-year periods for activities of a special nature. The exemption is granted by decision of the Minister of Finance.
The exemption does not apply to banks and financial institutions, insurance and reinsurance companies, projects providing telecommunications services, contracting companies, or companies and establishments operating in land and maritime transport.
Administrative offices, commercial representation and import-export activities may also fall within the special-nature category where they add value to the national economy.
Service providers are included provided the contract term is at least 15 months when the exemption application is submitted. The OPAZ board may also designate other projects that demonstrate added economic or strategic value.
On licensing, OPAZ must decide a complete application within seven working days. If it does not respond within that period, the application is deemed approved.
Refusals must be reasoned and may be appealed to the OPAZ chairman within 60 days. The regulation also allows licences to be issued automatically following electronic verification of the required information, documents and applicable requirements.
Licences are valid for three years and may be renewed for similar periods, with renewal applications submitted 30 days before expiry.
Applications for the single approval available to strategic projects must be decided within 30 days of submission of all required documents. In this case, however, the absence of a response within that period is deemed a rejection.
The regulation also tightens implementation requirements for investors. If a project fails to begin activity within its approved timetable and any additional extension granted, both the project licence and the allocation of land or property are deemed cancelled, without prejudice to the rights of other parties connected with the project.
An extension may be granted where the delay results from force majeure or emergency circumstances beyond the investor’s control, but it cannot exceed half of the original period set for starting the activity. Requests for an extension must be decided within 15 days.
Strategic projects holding a single approval must also submit quarterly reports on technical and operational progress.
The Executive Regulation was issued under OPAZ Decision 81/2026, dated September 16, and published in Official Gazette No. 1666 on September 20.
It takes effect on the day following publication. Entities covered by its provisions have up to six months from the date it comes into force to bring their status into compliance.
The OPAZ chairman is to issue the forms and instructions required to implement the regulation.
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