The Law of Free Zones
Issued by Royal Decree 56/2002
Chapter One: Definitions and General Provisions
In applying the provisions of this law, the following phrases and words have the meaning assigned to each of them, unless the context requires otherwise:
Taxes: All types of taxes that were or are imposed by law.
Fees: All types of fees payable to any governmental or public body under the laws, regulations, and systems in force, but excluding litigation fees.
Board: The Board of Directors of the Public Authority for Special Economic Zones and Free Zones. 
Concession agreement: The agreement under which the government grants the operator the right to manage and operate the free zone in accordance with the provisions of this law.
Free zone: Any free zone established by royal decree in accordance with article 2 of this law.
Customs territory: Any area within the borders of the Sultanate, but excluding free zones.
Operator: Any entity, company, or establishment that has been granted the right to manage and operate a free zone in accordance with the concession agreement.
Working company: Any company, establishment, commercial representative office, or branch of a company or establishment, whether Omani or foreign, licensed to practise the permitted activities within the free zone.
Goods: Any machinery, equipment, materials, products, spare parts, or fuels used, produced, distributed, or manufactured in whole or in part, or consumed with the knowledge of the working company for any purpose whatsoever.
One-stop-shop system: A system through which all licences, permits, approvals, and visas are issued; procedures for registering the working company are completed; and all rules and systems relating to both the operator and the working company are applied, in accordance with the law.
The establishment of a free zone shall be by royal decree, which shall state its location and borders and the incentives, advantages, and facilities that shall be granted to both the operator and the working company. With the exception of whatever is governed by a special text in this law or the royal decree establishing the free zone, all laws, regulations, and systems in force in the Sultanate shall apply to the free zone.
It is prohibited to grant any advantages, incentives, or facilities provided for in this law or the decree establishing the free zone to bodies other than the operator as of the effective date of the decree establishing the free zone.
Both the operator and the working company shall be exempted from taxes and from submitting income declarations stipulated in the aforementioned Corporate Income Tax Law. Exemptions are issued by a decision of the Minister Supervising the Ministry of Finance in accordance with the rules determined by the board.
In exception of the provisions of the aforementioned Commercial Companies Law and Foreign Capital Investment Law, the capital of both the operator and the working company may be wholly owned by non-Omanis.
The working company may not practise any activity or business that it has not been licensed to practise, and may not practise business in the customs territory except in accordance with the laws, regulations, and systems in force.
A committee for free zones shall be established headed by the Minister of Commerce and Industry and the membership of each of the following:
- The Minister of Transport and Communications
- The Minister of Regional Municipalities, Environment, and Water Resources
- The Minister of Manpower – The Inspector General of Police and Customs
- The Secretary General of the Ministry of National Economy
- The Secretary General of Taxation in the Ministry of Finance
- The Chairman of the Board of Directors of the Oman Chamber of Commerce and Industry
The head of the committee shall choose the secretary.
The committee may form subcommittees if necessary to study some topics.
The board shall have the following competences:
(a) Approving the regulations and decisions implementing the provisions of this law prior to their issuance.
(b) Setting the rules and systems relating to any free zone established in accordance with the provisions of this law, which shall include the appointment of the operator and the manner in which oversight is carried out over the activities the entity undertakes in accordance with the concession agreement, as well as the rules and systems necessary for the management and operation of the free zone.
(c) Approving concession agreements before concluding them with the knowledge of the chairman of the board on behalf of the Government of the Sultanate.
(d) Setting the comprehensive plan for free zones.
(e) Approving business and development plans for the free zone that are submitted by the operator.
(f) Coordinating with relevant bodies for the provision of security and emergency services within the free zone.
(g) Coordinating with relevant bodies to ensure the performance of their obligations arising from concession agreements.
(h) Promoting investment opportunities in free zones, including the advertisement of the incentives, advantages, and facilities granted to both the operator and the working company.
(i) Specifying Omanisation percentages in free zones.
(j) Implementing the one-stop-shop system in free zones.
(k) Setting the rules governing the movement of goods and the movement of persons to and from free zones and separating it from the customs territory.
(l) Determining the amounts paid by the working company to the operator.
(m) Forming a committee for each free zone from members representing the government and the working company to propose draft regulations, decisions, rules, and systems relating to the free zone and presenting them to the board to take the appropriate decision in this regard.
(n) Conducting an annual evaluation of the performance of free zones and submitting it to the Council of Ministers.
Chapter Two: Definitions and General Provisions
The operator shall be granted the concession of managing and operating the free zone in accordance with the provisions of this law and the royal decree establishing the free zone.
The operator shall undertake the following:
(a) Proposing business and development plans of the free zone and regulations and controls for the use and planning of the lands in them.
(b) Implementing the regulations, decisions, rules, and systems issued by the board.
(c) Providing all services and facilities within the free zone.
The operator shall have the benefit to utilise the lands and facilities within the borders of the free zone and whatever relates to that from the mortgage of the right of usufruct and the financing, developing, marketing, and managing of the aforementioned lands and facilities and the works relating to them, without prejudice to any ownership rights prescribed on the lands within the borders of the free zone prior to the establishment of the free zone.
The concession to manage and operate the free zone may only be granted to one operator.
Chapter Three: Incentives, Advantages, and Facilities for the Working Company
The committee may exempt the working company from the minimum capital requirement stipulated in the aforementioned Commercial Companies Law or any other law.
The working company may not be nationalised except by virtue of a law in exchange for fair compensation. It is also not permitted to seize its assets, confiscate any of them, or place the company under guardianship except by virtue of a judicial ruling.
The working company shall be exempted from any restrictions on the provision, trading, and transfer of foreign currencies and shall be exempted from applying the provisions of the aforementioned Commercial Agencies Law.
In order for the working company to enjoy the advantages, exemptions, and facilities stipulated in this law and the decree establishing the free zone, it must carry out its business and activities within the free zone and export a percentage of its products specified by the board.
The working company is prohibited from assigning the aforementioned advantages, exemptions, and facilities to any entity and in any manner.
It is not permitted for any company, establishment, commercial representative office, or branch of a foreign company operating within the customs territory to be licensed to practise the activity within the free zone except after fulfilling its financial obligations to the government and public authorities and establishments, and their subordinate bodies.
The aforementioned amounts may be collected in accordance with the System for the Collection of Taxes, Fees, and Other Amounts Due to Units of the Administrative Apparatus of the State promulgated by Royal Decree 32/94.
Chapter Four: Goods
With the exception of goods whose import is prohibited, goods imported into the free zone may be moved without any restriction, whether within or between free zones.
Goods imported into or exported from the free zone shall be exempted from customs duties
Goods imported into the free zone shall not be subject to any restriction regarding the period of their stay there, unless the operator decides otherwise, depending on the type and nature of the goods.
Goods that are manufactured or assembled in the free zone when exported to any other country or place shall be treated as locally produced goods, taking into account the international agreements concluded by the government.
Goods leaving the free zone into the customs territory shall be treated as foreign goods even if they include local raw materials.
Chapter Five: Punishments
Without prejudice to any punishment more severe, whoever violates the provisions of this law shall be punished by a fine not exceeding 5,000 (five thousand) Rial Omani and the confiscation of the property subject of the violation. If the violation is repeated, the punishment shall be doubled.
 The term “Free Zones Committee”, wherever it appears in the law, was replaced by the phrase “the Board of Directors of the Public Authority for Special Economic Zones and Free Zones” by Royal Decree 105/2020.