SOHAR Freezone offers tax and customs advantages, but current investors should separate three different systems: the 2025/2026 zone income-tax framework, VAT Special Zone rules, and customs treatment for goods.
For the wider SOHAR context, use the SOHAR Freezone Investor Guide.
1. Current income-tax framework
Royal Decree 38/2025 created a unified zone tax framework. Article 27 provides a 10-year exemption from taxes imposed by the Income Tax Law from commencement of the activity, with two possible additional 10-year periods for activities of a special nature under Regulation 81/2026 and the required approval process.
The exemption must be issued by decision of the Minister of Finance. A SOHAR licence or lease is not, by itself, the tax-exemption decision.
2. Older SOHAR 25-year material is legacy context
SOHAR’s older law and investor material describe an older 10 + 5 + 5 + 5 structure linked to Omanisation levels. Royal Decree 38/2025 preserves already-granted legacy benefits for existing companies until their own expiry, but a new investor should not assume that old package applies automatically.
For the full current legal framework, use Oman Free Zone Tax Exemptions Under Royal Decree 38/2025.
3. Article 27 excludes certain sectors
- banks and financial institutions;
- insurance and reinsurance;
- telecommunications services;
- construction companies;
- land-transport companies/establishments;
- maritime-transport companies/establishments.
An excluded sector may still have another tax rule or exemption elsewhere in Omani tax law. Check the exact legal basis.
4. Tax exemption does not remove tax returns
Article 27 expressly requires exempt enterprises/operators to submit tax returns and attached documents under the Income Tax Law. SOHAR companies should keep accounting and exemption evidence even when tax payable is zero.
5. VAT is separate
Oman Tax Authority currently lists Sohar Free Zone as a VAT Special Zone. Supplies to, from or within a Special Zone may qualify for zero-rating only when the VAT Executive Regulation conditions are met.
Mainland Oman sales need their own VAT/import analysis. Do not read ‘Special Zone’ as automatic zero VAT on every transaction.
6. Customs benefits are separate again
SOHAR markets 0% import/re-export customs duties for goods operating within the free-zone regime. Customs treatment changes when goods are diverted to another use, sold into mainland Oman or otherwise leave the qualifying route.
For mainland entry, use the free-zone mainland-sales guide.
7. Omanisation should be checked under current rules
Older SOHAR material connects tax-extension periods to specific Omanisation percentages. For a new/current project, use the current Royal Decree 38/2025 framework, Regulation 81/2026 and live Ministry of Labour/zone requirements rather than presenting the legacy table as the rule for every company.
| Issue | Current approach |
|---|---|
| Initial income-tax exemption | Article 27 10-year framework, subject to eligibility and exemption decision. |
| Renewal beyond 10 years | Activity of a special nature under Regulation 81/2026 and approval process. |
| Legacy company | Check the actual granted exemption and expiry under Article II grandfathering. |
| Omanisation | Use live Ministry/zone requirements and project conditions. |
| VAT | Check Special Zone zero-rating conditions separately. |
| Customs | Check goods/use/destination and Bayan route separately. |
8. Frequently asked questions
Does every new SOHAR company get 25 years tax free?
No. The current unified law uses a 10-year initial Article 27 period with possible two 10-year renewals for special-nature activities. Older 25-year SOHAR structures may remain relevant only to grandfathered existing rights.
Does SOHAR tax exemption mean no tax return?
No. Article 27 requires tax returns and supporting documents.
Is SOHAR a VAT Special Zone?
The Tax Authority’s current guidance lists Sohar Free Zone as a VAT Special Zone, subject to the conditions in the VAT Executive Regulations.
Are goods entering mainland Oman still exempt from customs?
Do not assume it. Mainland entry uses its own customs declaration, duty/VAT and product rules.
What Omanisation rate applies for a new SOHAR project?
Check the live Ministry of Labour and SOHAR/project requirements; do not rely on one legacy percentage table as a universal current rule.
9. Official sources
- Royal Decree 38/2025
- OPAZ: Regulation 81/2026
- Oman Tax Authority: VAT and Special Zone guidance
- SOHAR: current incentives page
Official public information reviewed on October 2, 2026. Confirm the live exemption decision, VAT treatment and customs route before budgeting.
