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Oman’s Trade Landscape
13 min 57 sec Written by
s.qudah@tamimi.com 
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Oman in 2026 looks different. A unified zones law, personal income tax, a maturing PPP framework, tighter corporate governance and a specialist investment court are changing how investors and lenders assess risk, structure deals and deploy capital. At the same time, disruptions in the Strait of Hormuz and the Red Sea have put Oman’s ports and logistics infrastructure in the global spotlight — reinforcing its position as an alternative gateway to the Gulf and beyond.
Below, we set out the key developments and data points that boards, deal teams and credit committees need to know.
Vision 2040: Policy Turned into Law
Vision 2040 is no longer just a strategy document — it is being implemented. The 11th Five-Year Development Plan (2026–2030) drives a 20-year shift toward diversification, modernisation and fiscal sustainability. Non-oil growth is the headline metric, with manufacturing, logistics, tourism, mining, fisheries and renewables as priority sectors.
- By end-Q4 2024, non-oil activities reached OMR 28.32 billion in value added, up 4.1% year-on-year, while oil activities fell 4% and accounted for 32% of GDP.
- In 2025, non-oil GDP rose to OMR 28.70 billion (up 3.1%), compared with petroleum activities growing just 1.1% to about OMR 12.02 billion. Non-oil exports grew 7.2% between January and May 2025 to roughly OMR 2.7 billion.
- The 2025 Economic Performance Bulletin records 3.39% real growth in non-oil activities through Q3 2025, driven by 9.11% growth in agriculture and fisheries, 1.80% in industrial activities and 3.79% in services.
The takeaway for investors: major legislative moves — the new SEZ/free-zone regime, PPP rollout and personal income tax — all tie back to stated Vision 2040 targets. They are not one-off reforms. The Ministry of Finance reports that 74% of Vision 2040 performance indicators show substantial progress, pointing to coordinated, top-down reform rather than piecemeal change.
Geopolitics: Why Oman’s Location Matters More Than Ever
You cannot assess Oman’s investment landscape without looking at the geopolitics reshaping Gulf maritime trade. Red Sea shipping disruptions since late 2023 have kept Suez Canal traffic roughly 60% below pre-crisis levels. Many carriers are rerouting around the Cape of Good Hope — adding around USD 1 million per voyage in fuel and 10–14 extra days in transit. The knock-on effect: an estimated USD 15–20 billion a year in additional global supply chain costs and 0.3–0.5 percentage points added to global food price inflation.
On top of that, tensions around the Strait of Hormuz — through which roughly 20% of the world’s oil moves daily — have added further uncertainty. In early 2026, regional hostilities disrupted Strait transit, prompting MSC, Maersk and CMA CGM to impose emergency surcharges and suspend new bookings for Arabian Gulf ports. War-risk insurance premiums for vessels in the region have surged by 60% or more.
This is where Oman’s geography pays off. Its three main ports — Salalah, Sohar and Duqm — sit outside both the Strait of Hormuz and the Bab el-Mandeb threat zones. In March 2026, SOHAR Port saw a 1,766% surge in ship destination change requests; Salalah posted an 800% increase in route diversions. A Dubai Customs “Green Corridor” now links Oman and the UAE, and Qatar has designated Sohar, Salalah and Duqm as key alternative ports.
Overland connectivity reinforces the trend. The UAE–Oman Hafeet Rail project — a USD 2.5 billion joint venture that reached financial close in October 2024 — will connect Sohar port to Abu Dhabi and the UAE national rail network, creating a rail–sea gateway into the wider GCC. Salalah remains the world’s second most efficient container port (2023 World Bank/S&P Index), handling around 3.3 million TEUs in 2024. Duqm’s cargo volumes grew 152% in the same year.
For investors and lenders, this geopolitical context is not peripheral to the legal and regulatory analysis. It is what transforms Oman’s zone, tax and investment reforms from policy announcements into commercially significant structural advantages. Legal clarity around zones, customs and investment is what turns Oman’s physical geographic advantage into bankable structures.
Investment Environment: Open, But with Clearer Rules
Oman’s Foreign Capital Investment Law (Royal Decree 50 of 2019 as amended) remains the backbone of its openness to foreign capital. It permits 100% foreign ownership in a wide range of activities, subject to a negative list and sectoral licensing, and offers a streamlined “one approval” route for strategic projects above an OMR 10 million threshold. On the ground, investors continue to experience relatively straightforward incorporation of limited liability and single-shareholder companies, backed by clear governance, accounting and audit requirements. Foreign investment projects benefit from statutory protections against uncompensated expropriation and enjoy freedom to repatriate capital and profits.
The numbers show this framework is being actively used:
- The Ministry of Commerce, Industry and Investment Promotion (MoCIIP) reports that the cumulative number of commercial registrations increased by 13.96% in 2024 to 441,773 registrations, compared with 2023. During H2 2024, 18,437 Omani citizens were employed in wholesale and retail trade, construction and manufacturing under MoCIIP programmes. By February 2025, the Investor Residency Programme had issued 3,407 “Golden Residency” cards to investors from more than 60 countries.
- FDI stock reached around USD 78.8 billion by end-Q2 2025, up 12.8% year-on-year, with USD 8.84 billion of inflows concentrated in logistics, renewable energy, advanced manufacturing, tourism, mining, food security and the digital economy.
- One recent development to note: MoCIIP Decision No. 411/2025 now requires foreign-owned establishments and companies to employ at least one Omani national (registered with the Social Protection Fund) within a year of starting operations. Existing entities have transitional compliance mechanics. Non-compliant companies face administrative penalties. The broader direction is clear — more codified, enforceable rules and less reliance on informal understandings. Investors who build compliant corporate, HR and governance structures from the outset will be best positioned.
Corporate Governance: Higher Standards for Unlisted Companies
Alongside investment openness, Oman has tightened the governance baseline for corporate entities, particularly closed joint-stock companies. Ministerial Decision 5 of 2025, issued by MoCIIP and effective 14 January 2025, promulgates the Principles of Corporate Governance for Closed Joint-Stock Commercial Companies (SAOCs). The Code largely aligns SAOC governance with standards applied to listed SAOGs, including requirements on board composition and independence, board committees (such as audit and nomination/remuneration), enhanced disclosure of related-party transactions, and more prescriptive rules on convening and conducting general meetings. SAOCs are required to amend their articles of association within one year of the Code’s effective date to reflect the new principles.
Complementary amendments to the Commercial Companies Regulation under Ministerial Decision 245 of 2025 (amending Ministerial Decision 146 of 2021) streamline corporate procedures and align secondary rules with the Commercial Companies Law (Royal Decree 18 of 2019). For investors and lenders, the practical effect is that unlisted joint-stock vehicles will increasingly resemble listed companies in their governance expectations, reducing key-person and transparency risk in SAOC-based structures and providing a more reliable platform for pre-IPO and institutional participation.
Zones and Industrial Policy: One Law, Multiple Platforms
The biggest structural reform for corporates is the new Law of Special Economic Zones and Free Zones (Royal Decree 38 of 2025), effective 14 April 2025. It consolidates the old Free Zones Law (Royal Decree 56 of 2002) and the Duqm SEZ framework (Royal Decree 119 of 2011) into a single regime under OPAZ, which now oversees more than 20 SEZs, free zones and industrial cities.
What does this mean in practice? Three things. First, one framework, multiple platforms: Duqm, Sohar, Salalah and other zones now sit under a single legal umbrella, reducing fragmentation and enabling cross-zone structuring. Second, codified incentives: qualifying enterprises can access a 10-year income tax exemption from the start of operations, renewable for up to 30 years total for strategic activities; customs duty exemptions on zone imports and exports; 100% foreign ownership for operators, enterprises and real estate developers; exemptions from minimum capital requirements (subject to approvals); and the ability for developers to sell freehold real estate to non-Omanis within zone projects. Third, digital processes: governance, licensing, land allocation and approvals run through a digital one-stop shop, with transitional provisions protecting existing operators’ incentives until their current terms expire.
OPAZ reports that new investments in these zones exceeded OMR 1.4 billion in 2025, bringing total committed investments to roughly OMR 22.4 billion, a 6.8% increase compared with 2024. Ministry and Tejarah data show that FDI in the industrial sector grew 27.5% in Q1 2025 to OMR 2.749 billion, making industry the leading non-oil FDI destination and aligning with the Industrial Strategy 2040. For corporate and project-finance clients, Omani zones can now be treated as predictable, law-backed operating bases rather than bespoke exceptions.
PPP and Infrastructure: Moving from Law to Live Projects
The PPP Law (Royal Decree 52 of 2019) and its implementing regulations (Decision 3 of 2020) are now in the applied phase. PPP projects are exempt from the general Tender Law, with a tailored process covering feasibility, pre-qualification, competitive tendering, negotiation and financial close across power, water, waste, transport, education and social infrastructure.
The framework covers risk allocation, step-in rights, tariffs, change-in-law, termination and dispute resolution, and allows PPP tenors of up to 50 years — longer than traditional IPP/IWPP terms. The Ministry of Finance now oversees PPPs following the dissolution of the original PPP authority. Both the PPP and Privatisation Laws permit 100% foreign ownership of project and privatised entities.
The government has identified at least 11 PPP projects and initiatives spanning transport and logistics, health, education, agriculture, fisheries, construction and ICT — including the Salalah–Thumrait truck road, a 42-school bundle, diagnostic-centre management, fishery-harbour development and wind IPPs.
A critical judicial development underpinning this framework is the Law of the Investment and Commercial Court (Royal Decree 35 of 2025), which establishes a specialised court mandated to resolve investment and commercial disputes within 90 days of registration, with a possible 45-day extension for complex cases. The court is supported by integrated judicial and civil registration systems to streamline evidence and enforcement. For investors and lenders, this offers a time-bound, technically focused forum for high-value disputes that can be factored into governing law and dispute resolution choices and built into bankability assessments.
Tax: Corporate Tightening and Personal Income Tax Ahead
Oman’s income tax framework, based on the Income Tax Law (Royal Decree 28 of 2009, as amended), has been steadily tightened. Corporate tax remains regionally competitive in rate, but practice is increasingly characterised by more detailed permanent establishment definitions, clearer deductibility rules and stronger expectations around timely and accurate filing. The Tax Authority is investing in data-driven systems and inter-agency integrations to cross-check declarations, increasing the importance of robust transfer pricing and substance documentation, especially for cross-border groups and zone-based structures.
The landmark development is the enactment of the Personal Income Tax Law (Royal Decree 56 of 2025), which introduces a 5% tax on individuals with annual gross income above OMR 42,000, effective 1 January 2028. The threshold and determination of taxable income is calibrated in a manner which may result in the majority of residents falling outside the scope of the PIT regime. The law allows for certain deductions in relation to education, healthcare, zakat, charitable donations and primary home interest). The PIT would require employers to withhold and remit tax on employment income on behalf of employees; however, further detail in relation to the Executive regulations are expected within a year of publication.
The PIT law is published well ahead of implementation, giving boards time to adjust compensation, localisation and functional allocation across the GCC. It supports Vision 2040’s goal of raising the tax-to-GDP ratio to around 15% by 2030 and 18% by 2040 — in a measured, predictable way rather than through sudden, crisis-driven measures.
For large multinationals, Oman implemented an income inclusion rule and domestic minimum top-up tax under the BEPS Pillar Two framework from 1 January 2025 (Royal Decree 70 of 2024). Implementing regulations are awaited but are expected to follow the OECD Model Rules closely. Early modelling of effective tax rates and data readiness will be important.
Employment: Now a Structural Consideration, Not Just an Operational One
Employment and workforce regulation is an increasingly important underlying part of the legal architecture shaping foreign investment in Oman, rather than a downstream operational concern. While the Oman Labour Law (Royal Decree 53 of 2023 as amended) continues to anchor employer–employee relations, workforce structuring is now more directly connected to licensing conditions, localisation policy and fiscal compliance, reflecting the broader Vision 2040 emphasis on economic participation and private‑sector employment.
Regulatory focus in this area is moving toward clarification and standardisation, particularly in segments of the labour market that have historically operated with a degree of structural flexibility. Current policy signals suggest an intent to define boundaries and responsibilities more clearly, rather than to introduce abrupt or restrictive change. Within this context, forthcoming employment‑related regulations are expected to address:
- Regulation of Non‑Omani Manpower Recruitment Offices, aimed at regulating labour recruitment offices engaged in the placement of basic / lower‑skilled manpower, including licensing requirements, scope of permitted activities and compliance oversight;
- Regulation of human resources supply companies — particularly relevant for investors using manpower outsourcing, secondment or managed-services models; and
- Regulation of work in the oil and gas sector, covering workforce requirements, contractor obligations and localisation expectations.
These sit alongside recent measures linking employment more directly to corporate permissibility — including localisation-driven licensing conditions, minimum Omani employment requirements for foreign-owned entities, and employer withholding obligations under the new PIT framework. The consistent theme: employment arrangements are increasingly treated as evidence of economic substance and regulatory alignment, not just an administrative function.
For boards and deal teams, the implication is not immediate constraint, but the need for deliberate workforce design. Employment models, outsourcing structures and compensation frameworks should be capable of accommodating regulatory clarification as it emerges, particularly where they intersect with localisation planning, licensing continuity and payroll‑based compliance under the evolving tax regime.
9. FDI and Growth: What Capital Is Actually Doing
Official data show Oman’s FDI stock more than doubling from about OMR 14.2 billion in 2020 to roughly OMR 30 billion in 2024, driven by reforms and sectoral strategies.
- By the end of Q1 2025, FDI stock reached OMR 30.61 billion, with inward investments of OMR 5.23 billion, up from OMR 4.11 billion in Q1 2024. By end-Q3 2025, FDI stock had risen to OMR 30.95 billion, a 16.2% year-on-year increase, with inflows of OMR 4.32 billion in the first nine months of 2025 compared with OMR 3.30 billion a year earlier — a 30.9% increase.
- Oil and gas exploration remains the dominant FDI destination, accounting for about OMR 24.9 billion of stock by Q3 2025 (up 21.1% year-on-year) and approximately 81% of total FDI stock, with OMR 4.33 billion of inflows in the first nine months of 2025. Manufacturing ranks second with around OMR 2.7–2.75 billion of FDI stock, an 11.1% year-on-year increase.
- Real-sector indicators are aligned: the Ministry of Finance reports 4.14% growth in non-oil activities in H1 2025, and the IMF projects real GDP growth of 2.9% in 2025 and 4.0% in 2026, as non-oil sectors, particularly industry and services, accelerate.
What are investors actually doing? They are using SEZ/free-zone SPVs in Duqm, Sohar and Salalah as anchors for manufacturing, assembly and regional distribution. They are bidding into PPPs using regional project finance templates adapted to Omani law. They are building corporate structures with real decision-making and compliance capacity in Oman — not “nameplate” presence. And they are drafting contracts with explicit change-in-law clauses, including references to future PIT and evolving PE tests.
Boardroom Questions for 2026
For regional boards, the question is no longer “if Oman?” but “on what legal and fiscal terms?”:
- Are we using the new SEZ/Free Zones Law optimally — zone-based SPVs where we genuinely qualify for tax and customs relief, and onshore entities only where strategic?
- How do our existing Omani structures align with stricter permanent-establishment rules and enhanced compliance expectations — and do we need to uplift governance, documentation and substance to avoid disputes or reassessments?
- How will the Pillar Two rules impact our effective tax rate and are we in a position to accurately calculate our Pillar Two exposure and determine whether any reliefs or safe harbours may apply?
- For upcoming infrastructure, utilities or social projects, are we prepared to bid under the PPP Law and the framework led by the Ministry of Finance, with bankable risk allocation and financing structures that reflect the new legal architecture?
- How does the 2028 Personal Income Tax Law (5% above OMR 42,000) affect our talent strategy and cost base for senior staff, and do we need to rebalance functions between Oman and other GCC centres?
- Within our GCC portfolio, is Oman positioned as a hydrocarbon-plus industrial/logistics and tourism node and are our legal, tax and governance arrangements consistent with that targeted, sector-specific role?
- In light of the geopolitical disruptions reshaping maritime trade routes, are we factoring Oman’s port and logistics infrastructure outside the Strait of Hormuz and Bab el-Mandeb into our supply chain resilience and regional distribution planning?
How Al Tamimi & Company Can Help
For corporate clients, the issue is no longer simply understanding what Oman’s laws say today. The challenge is building cross-border structures that optimise the use of Omani zones versus onshore Oman versus other GCC hubs; that align PPP risk allocation and security with what regional lenders will accept; that anticipate and accommodate corporate tax tightening and future PIT; and that allocate regulatory change, enforcement and dispute resolution risk in a way that is consistent with wider GCC documentation and practice.
Al Tamimi & Company is positioned to support on all four fronts. Our teams advise on corporate, tax, PPP, projects and disputes across the GCC and can help you design an Oman platform that fits within a coherent global structure, rather than as a stand-alone outlier.
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