# Khazaen Free Zone Company Setup: Status, Incentives & Steps

> Khazaen Free Zone refers to the two free zones created inside Khazaen Economic City (Barka, South Al Batinah) by Royal Decree 44/2023, run by Asyad's Oman Logistics Company under OPAZ supervision.

URL: https://omanregister.com/free-zones/khazaen-free-zone/
Updated: 2026-10-24
Publisher: Oman Register (omanregister.com) — company registration and residency services in Oman. Contact: +968 7733 3556, info@omanregister.com

## At a glance

- **Legal basis:** Royal Decree 44/2023 (two free zones inside Khazaen Economic City)
- **Regulator:** OPAZ (Public Authority for Special Economic Zones and Free Zones)
- **Operator / developer:** Oman Logistics Company (Asyad) / Khazaen Economic City LLC
- **Location:** Wilayat of Barka, South Al Batinah, about 30 min from Muscat airport
- **Zone focus:** Zone 1: light & medium industry, logistics. Zone 2: business & trade
- **Ownership:** Up to 100% foreign
- **Nearest port:** Sohar Port (about 2 hours); on-site Khazaen dry/land port
- **Best for:** Light manufacturing, food, pharma, logistics and re-export near Muscat

Khazaen Free Zone is the free-zone part of Khazaen Economic City in Barka, South Al Batinah, roughly halfway between Muscat and Sohar. Royal Decree 44/2023 created two free zones inside the city: one for light and medium industry and logistics, and one for business and trade. Companies set up here can be 100% foreign-owned and receive the customs and income tax incentives of Oman's 2025 Special Economic Zones and Free Zones Law.

## What is Khazaen Free Zone and how does it relate to Khazaen Economic City?

[Khazaen Economic City](https://omanregister.com/free-zones/khazaen-economic-city/) started as a logistics and industrial city developed by Asyad Group with private partners. In July 2023, Royal Decree 44/2023 gave the city a formal legal framework under OPAZ and established **two free zones within its boundaries**:

- **Free Zone 1:** light and medium industries plus logistics
- **Free Zone 2:** business and trade

The decree names **Khazaen Economic City LLC** as developer and **Oman Logistics Company LLC** (Asyad Group) as operator of the city and both free zones. When you register a company online, the Oman Business Platform lists it as "Khazaen Free Zone".

In practice: if you need customs-free import of machinery and raw materials, re-export, or the free-zone tax exemption, you register inside the free-zone area. If you only need land and offices in the wider city, the rules for the rest of the economic city apply. The zone team confirms which area your plot is in.

## Where is it and how is it connected?

- **Location:** Wilayat of Barka, South Al Batinah Governorate, where the Muscat Expressway meets the Batinah Highway
- **Airport:** about 30 minutes from Muscat International Airport
- **Seaports:** about 2 hours by road from Sohar Port; Suwaiq Port is also nearby
- **On-site customs:** the Khazaen Dry Port (now marketed as Khazaen Land Port) opened in late 2021 on 100,000 m², with a stated capacity of 70,000 containers a year and customs officers working on the Bayan system
- **Rail:** land has been set aside for the future national railway

Officials put the economic city at about 52 million m². The decree text does not say how much of that is free-zone land.

## Who is Khazaen Free Zone best for?

- **Light manufacturing and assembly** that supplies the Muscat market and exports to the GCC
- **Food processing and food logistics**, close to the Khazaen central fruit and vegetable market
- **Pharmaceuticals and medical products**, which already make up a large share of Khazaen's investment
- **Warehousing, distribution and re-export** that benefit from customs clearance at the dry port
- **Trading companies** that want a free-zone address within an hour of Muscat

It suits you less if you need deep-water port frontage or very large heavy-industry plots. For those, look at Sohar Free Zone or [Duqm SEZ](https://omanregister.com/free-zones/duqm-special-economic-zone/).

## What incentives does Khazaen Free Zone offer?

Zone incentives now fall under the **Special Economic Zones and Free Zones Law (Royal Decree 38/2025)** and its Executive Regulations (OPAZ Resolution 81/2026, issued September 2026):

| Incentive | What applies (2026) |
|---|---|
| Foreign ownership | Up to 100% |
| Income tax | 10-year exemption from start of operations, extendable twice for activities of a special nature; banks, insurance, telecoms, contracting and land/sea transport are excluded |
| Customs | No customs duty on goods used to build and run the project or on exports from the zone; goods sold into mainland Oman pay duty as imports |
| Minimum capital | Waivable for zone enterprises, subject to approval |
| Licensing | Digital one-stop shop, with automatic licence issue and renewal where the checks pass |
| Omanisation | Set by the zone and activity; OPAZ's FAQ lists up to 35% for Khazaen |

Large multinational groups (worldwide revenue of EUR 750 million or more) should also check Oman's 15% domestic minimum top-up tax, which can reduce the value of a zone exemption. VAT treatment in zones has special rules, so get advice for your specific supply chain.

## How do you set up a company in Khazaen Free Zone?

1. **Define the activity and space.** Choose between an office or trading licence, a warehouse, or an industrial plot. This decides your licence category and environmental classification.
2. **Approach the zone.** Send the zone a short project profile covering activity, investment, land or building needs, staffing and utilities.
3. **Reserve the name and register** on the Oman Business Platform, selecting Khazaen Free Zone. Usually this means an LLC or an SPC.
4. **Pay the government fees**: commercial registration, Oman Chamber of Commerce and Industry membership, and the zone's administrative charges.
5. **Sign the lease or usufruct agreement** for your plot, warehouse or office.
6. **Get the environmental permit.** Category 3 (light) activities meet general conditions. Category 2 needs an Environmental Management Plan. Category 1 (heavy) needs an ESIA and OPAZ approval.
7. **Get the activity licence, then build or fit out.**
8. **Hire staff.** Apply for labour clearances and investor and employee visas, and meet the Omanisation requirement.
9. **Apply for the tax exemption** with the Tax Authority once you have the CR, licences and Omanisation certificate.

## Which documents are usually required?

- Passport copies of all shareholders and managers; Omani ID cards for any Omani partners
- For corporate shareholders: the parent's certificate of incorporation, articles of association and a board resolution approving the Oman company, all notarised and attested by the Omani embassy and the foreign ministry of the home country
- A business plan or project profile with investment value and job plan
- Technical drawings and environmental documents for industrial projects
- A power of attorney if an agent files for you

## What does a Khazaen Free Zone company cost?

Khazaen does not publish a public fee list. Do not trust a quoted "package price" until the zone confirms it. Plan for these cost items:

- Commercial registration and OCCI fees (official government fees)
- Zone licence and administrative fees
- Land usufruct or lease rent per m² per year, plus service charges; for a factory this is the biggest item
- Construction or warehouse fit-out, plus utility connection charges
- Environmental studies for Category 1 and 2 projects
- Visas, labour cards, medical tests and Omani staff costs
- Accounting, audit and annual renewals

Khazaen has offered promotional discounts before. In 2020, for example, it waived the first year's rent and halved rent for years two and three, but that offer ended in December 2020. Ask what is offered now.

## Pros and limitations

**Pros**
- The closest free zone with industrial land to Muscat, along the Muscat–Sohar corridor
- Customs clearance at the on-site dry port
- An existing group of food, pharma and packaging investors
- Run by Asyad, which also operates Oman's main ports and logistics network

**Limitations**
- The free zones date only from 2023, so some zone-specific rules and fee tables are still being published
- No seaport of its own; sea cargo moves by road via Sohar or Muscat
- Expect higher Omanisation targets than in Salalah or Duqm

## How does Khazaen compare with nearby options?

| Option | Best when |
|---|---|
| Khazaen Free Zone | You want free-zone status, light industry or logistics within about 30 minutes of Muscat airport |
| [Muscat International Airport Free Zone](https://omanregister.com/free-zones/muscat-international-airport-free-zone/) | Your business runs on air freight, e-commerce or high-value goods |
| [Sohar Free Zone](https://omanregister.com/free-zones/sohar-free-zone/) | You need seaport access and larger industrial land |
| [Rusayl Industrial City](https://omanregister.com/industrial-cities/rusayl-industrial-city/) | You mainly sell into Oman and can work without free-zone customs status |
| [Mainland company](https://omanregister.com/mainland-company-registration-oman/) | You trade freely across Oman and need no zone incentives |

For a wider view of the zones, see our [free zones hub](https://omanregister.com/free-zones/) and [Khazaen investment hub article](https://omanregister.com/khazaen-free-zone-a-strategic-investment-hub-in-oman/).

## How Oman Register helps

Oman Register checks whether your activity belongs in the free-zone part of Khazaen or in the wider city, then handles the registration on the Oman Business Platform. We also prepare and attest your documents, coordinate with the zone on space and licences, and arrange investor and staff visas, so you can compare a real quotation with other zones before you commit.

## FAQ

**Is Khazaen Free Zone the same as Khazaen Economic City?**

Not exactly. Khazaen Economic City is the whole development in Barka; Royal Decree 44/2023 created two free zones inside it. On the Oman Business Platform the free zone option appears as Khazaen Free Zone.

**Who regulates and operates Khazaen Free Zone?**

OPAZ supervises it. The decree names Khazaen Economic City LLC as developer and Oman Logistics Company LLC, part of Asyad Group, as operator of the city and both free zones.

**Can a foreigner own 100% of a company in Khazaen Free Zone?**

Yes. The Special Economic Zones and Free Zones Law (Royal Decree 38/2025) permits 100% foreign ownership for enterprises in zones, subject to approval of the activity.

**What tax exemption applies in Khazaen Free Zone?**

Under Royal Decree 38/2025, qualifying enterprises get a 10-year income tax exemption from the start of operations, extendable twice for special activities. Banks, insurers, telecoms, contracting and transport firms are excluded.

**How much does a Khazaen Free Zone licence cost?**

Khazaen does not publish a fixed public fee schedule. Costs depend on the activity, plot or warehouse size and lease terms, so you need a quotation from the zone for your project.

**How long does company setup in Khazaen Free Zone take?**

Online registration itself is quick once documents are ready, but zone approval, land or warehouse allocation and environmental permits usually make the total process several weeks. Factories with heavy environmental impact take longer.

## Sources

- [Royal Decree 44/2023 establishing Khazaen Economic City (decree.om)](https://decree.om/2023/rd20230044/)
- [OPAZ — Board statement on Royal Decree establishing Khazaen Economic City (2023)](https://www.opaz.gov.om/en/media-center/news/2023/opaz-board-of-directors-values-the-royal-decree-establishing-khazaen-economic-city-1)
- [OPAZ — Introductory meeting for investors in Al Batinah South (2024)](https://opaz.gov.om/en/media-center/news/2024/an-introductory-meeting-for-businessmen-and-investors-in-al-batinah-south-governorate)
- [OPAZ — FAQ (incentives, licences, documents)](https://opaz.gov.om/en/support/faq)
- [EY — Oman issues Law on Special Economic Zones and Free Zones (2025)](https://taxnews.ey.com/news/2025-0998-oman-issues-law-on-special-economic-zones-and-free-zones)
- [EY — Oman issues Supplementary Tax Law for certain multinational enterprises (2025)](https://taxnews.ey.com/news/2025-0145-oman-issues-supplementary-tax-law-for-certain-multinational-enterprises)
- [AGBI — Oman to set up two new free zones in economic city (2023)](https://www.agbi.com/articles/oman-to-set-up-two-new-free-zones-in-economic-city/)
- [GCC Business News — Asyad opens Khazaen Dry Port in Barka (2021)](https://www.gccbusinessnews.com/oman-national-logistics-group-asyad-opens-khazaen-dry-port-in-barka/)