# From Muscat to Duqm: The 5 Best Cities to Invest in Oman

> A practical comparison of Muscat, Sohar, Salalah, Duqm and the Khazaen/Barka corridor as investment locations in Oman, with the zones, sectors and incentives each offers.

URL: https://omanregister.com/from-muscat-to-duqm-the-5-best-cities-to-invest-in-oman-2026-edition/
Updated: 2026-10-24
Publisher: Oman Register (omanregister.com) — company registration and residency services in Oman. Contact: +968 7733 3556, info@omanregister.com

The best city to invest in Oman depends on what you sell and where your customers are. **Muscat** suits services, trading, tech and anyone who needs a residency-linked mainland company; **Sohar** suits manufacturing and logistics aimed at the UAE and GCC; **Salalah** suits re-export and shipping-linked businesses; **Duqm** suits large industrial and energy projects that need land; and the **Khazaen/Barka corridor** suits distribution and light industry close to Muscat.

This guide compares the five locations by sector, available zones, incentives and the type of investor each one fits, so you can shortlist one or two before looking at costs and procedures.

## How to choose a city in Oman: four questions first

Before comparing cities, answer these questions. They usually decide the location for you.

1. **Who are your customers?** If you sell mainly inside Oman, a mainland company (often in Muscat) is simpler. Free zone companies cannot sell directly into the local market without a distributor or a separate mainland entity.
2. **Do you import and re-export goods?** Then customs exemptions in a free zone, and the port next to it, matter more than the city itself.
3. **How much land and power do you need?** Office-based businesses can go anywhere; factories need industrial plots, utilities and environmental permits, which narrows the choice to Sohar, Duqm, Salalah or a Madayn industrial city.
4. **Is residency the main goal?** Any properly licensed company can sponsor investor residency, but the cheapest route is usually a small mainland company. See our [Golden Visa guide](https://omanregister.com/golden-visa/) for long-term options.

## 1. Muscat: services, trading, tech and head offices

Muscat is the capital and the commercial centre. Ministries, banks, embassies and most corporate clients are here, which makes it the default for consultancies, trading companies, IT firms, agencies and regional offices.

**Where to set up in Muscat:**

- **Mainland (any commercial area):** the most flexible option for selling in Oman. Most activities allow 100% foreign ownership. See [mainland company registration](https://omanregister.com/mainland-company-registration-oman/).
- **[Knowledge Oasis Muscat](https://omanregister.com/industrial-cities/knowledge-oasis-muscat/):** a Madayn technology park for IT, software and knowledge-based companies.
- **Muscat International Airport Free Zone:** for air-freight-dependent activities such as e-commerce fulfilment, pharmaceuticals and high-value goods.
- **Rusayl Industrial City:** light and medium manufacturing near the capital.

**Good fit for:** service businesses, traders selling locally, startups, and investors who want residency and a straightforward bank relationship.

**Watch out for:** mainland companies pay 15% corporate income tax on taxable profit (small companies meeting the conditions may pay less), and Omanisation targets apply by activity.

## 2. Sohar: industry and logistics for the GCC market

Sohar, in North Al Batinah, combines a deep-water port, a 45 km² free zone and a heavy-industry cluster (metals, petrochemicals, food). The port and free zone are run by SOHAR Port and Freezone, a joint venture between the Government of Oman and the Port of Rotterdam.

**Key points for investors:**

- [Sohar Free Zone](https://omanregister.com/free-zones/sohar-free-zone/) offers 100% foreign ownership, 0% import and re-export duties, and an advertised corporate tax holiday of up to 25 years tied to Omanisation milestones.
- Licence categories cover industrial, light manufacturing and assembly, logistics and general trade.
- United Solar's large polysilicon plant in the free zone has started production, adding to the zone's renewable-energy supply chain.
- Hafeet Rail, the planned Sohar–Abu Dhabi railway, is expected to begin trial operations in late 2027, which should further strengthen Sohar's link to the UAE.

**Good fit for:** manufacturers and logistics companies serving the UAE and wider Gulf, food processing, metals and chemicals.

## 3. Salalah: shipping, re-export and southern gateway

Salalah, in Dhofar, sits beside the Port of Salalah on the Arabian Sea, outside the Strait of Hormuz. That position matters for companies that ship to East Africa, South Asia and beyond.

- Salalah Free Zone was established in 2006 (Royal Decree 62/2006). OPAZ lists 100% foreign ownership, no minimum capital, no customs duties on imports and exports, and no tax on profits or dividends for up to 30 years under its original terms.
- Suitable activities include warehousing, re-export, assembly, food and pharmaceutical manufacturing, and port-related services.
- The Dhofar region also offers tourism opportunities thanks to its monsoon (khareef) season.

**Good fit for:** re-export traders, logistics and assembly businesses targeting Africa and the Indian Ocean.

## 4. Duqm: land, energy and heavy industry

The [Special Economic Zone at Duqm (SEZAD)](https://omanregister.com/free-zones/duqm-special-economic-zone/), on the central Arabian Sea coast, covers about 2,000 km² and is described by OPAZ as the largest special economic zone in the Middle East and North Africa. It includes a commercial port, a dry dock, the OQ8 refinery, a fishing port, industrial and logistics areas, tourism land and a new town.

- Incentives listed by SEZAD include 100% foreign ownership, no minimum capital, usufruct (land-use) agreements of up to 50 years renewable, and free repatriation of profits and capital.
- SEZAD advertises income tax exemption of up to 30 years, renewable; under the 2025 zones law, new enterprises should confirm whether the 10-year base exemption and extensions apply to them.
- Land is leased, not sold, and allocated after SEZAD evaluates your project.

**Good fit for:** large industrial, energy, petrochemical, fisheries and maritime projects, and companies that need large plots at competitive rates.

**Watch out for:** Duqm is remote from Muscat, so staff housing and logistics need planning. Plan these costs before applying for land.

## 5. Khazaen and Barka: distribution close to Muscat

Between Muscat and Sohar, the Barka area hosts [Khazaen Economic City](https://omanregister.com/free-zones/khazaen-economic-city/), a privately developed economic city with a dry port and logistics and light-industrial land, plus the Khazaen Free Zone. It appeals to companies that want to be near Muscat's consumer market without city-centre costs.

Further inland, Nizwa and the interior are served by Madayn's Nizwa Industrial City, a lower-cost option for local manufacturing and food processing.

**Good fit for:** wholesalers, distributors, light manufacturers and SMEs serving the Muscat and Batinah markets.

## Oman investment cities compared

| | Muscat | Sohar | Salalah | Duqm | Khazaen / Barka |
|---|---|---|---|---|---|
| Main strengths | Services, trading, tech, government access | Metals, petrochemicals, food, logistics | Re-export, shipping, assembly | Energy, heavy industry, maritime | Distribution, light industry |
| Main zones | Mainland, KOM, Airport Free Zone, Rusayl | Sohar Freezone, Sohar Industrial City | Salalah Free Zone, Raysut Industrial City | SEZAD | Khazaen Economic City, Khazaen Free Zone |
| Logistics edge | International airport | Port, roads to UAE, future rail | Port outside Hormuz | Deep-water port, dry dock, large land bank | Dry port near Muscat |
| Sell directly in Oman? | Yes (mainland) | Through distributor or mainland entity | Through distributor or mainland entity | Through distributor or mainland entity | Depends on structure |
| Best for | SMEs, residency seekers, service firms | GCC-focused manufacturers | Global traders | Mega and land-intensive projects | Wholesale and logistics SMEs |

## What changed for zone investors in 2025–2026

- **New unified law:** Royal Decree 38/2025 issued the Law of Special Economic Zones and Free Zones, supervised by OPAZ. It replaced the 2002 Free Zones Law.
- **Tax exemption reset for new projects:** the law provides a 10-year income tax exemption from the start of operations, extendable for activities of a special nature. Banks, insurers, telecoms, contracting and transport companies are excluded. Existing enterprises keep the incentives in their agreements until they expire.
- **Executive Regulations issued:** OPAZ issued the Executive Regulations (Regulation 81/2026) in September 2026, covering one-stop-shop licensing, automatic licence issue and renewal, and freehold real estate in special economic zones.
- **Personal income tax from 2028:** Oman will apply a 5% tax on resident individuals' annual income above OMR 42,000 from 1 January 2028. Most employees fall below this threshold, but high earners should plan for it.

## Common mistakes when choosing a location

- **Choosing a free zone but selling mostly in Oman.** You lose the customs benefit and need a local distributor or second entity anyway.
- **Relying on advertised tax holidays.** Check whether your activity is excluded and which law governs your exemption.
- **Underestimating Omanisation.** Free zones have lower quotas than the mainland, but they still apply and often rise over time.
- **Ignoring housing and staffing.** Remote zones such as Duqm need a plan for staff accommodation and transport.

## Next step

If you are still deciding between a mainland company and a zone, start with our overview of [all ways to register a company in Oman](https://omanregister.com/register-company-in-oman/) and the [Duqm vs Sohar vs Salalah comparison](https://omanregister.com/comparison-duqm-vs-sohar-vs-salalah-freezone-2026-guide/). Oman Register can review your activity and target market and tell you which location and structure fit before you spend money on applications.

## FAQ

**Which city in Oman is best for a small trading or services company?**

For most small trading, consulting and services businesses, Muscat is the practical choice because clients, government offices and banks are there. A mainland company in Muscat can also sell freely across Oman, which a free zone company cannot do directly.

**Can foreigners own 100% of a company in these cities?**

Yes. Free zones and the Duqm Special Economic Zone allow 100% foreign ownership, and since the Foreign Capital Investment Law took effect in 2020 most mainland activities are also open to full foreign ownership, apart from a restricted list.

**Do all Omani free zones still offer 25–30 year tax holidays?**

Zone websites still advertise up to 25 years (Sohar) and 30 years (Salalah, Duqm), but the 2025 Special Economic Zones and Free Zones Law sets a 10-year base exemption for new enterprises, extendable for qualifying activities. Existing enterprises keep their earlier terms, so new investors should confirm the exact period before signing.

**Which city is closest to the UAE market?**

Sohar, in North Al Batinah, is the closest major industrial hub to the UAE border and is linked to the Gulf by road. The planned Sohar–Abu Dhabi rail link (Hafeet Rail) is expected to start trial operations in late 2027.

**Where should I invest if I need a large industrial plot?**

Duqm offers the most land, with a 2,000 km² zone and usufruct agreements of up to 50 years, renewable. Sohar Freezone suits industrial projects that need an established port and heavy-industry cluster.

## Sources

- [OPAZ — Special Economic Zone at Duqm](https://opaz.gov.om/en/zones/special-economic-zone-at-duqm)
- [OPAZ — Sohar Free Zone](https://opaz.gov.om/en/zones/sohar-free-zone)
- [OPAZ — Salalah Free Zone](https://opaz.gov.om/en/zones/salalah-free-zone)
- [KPMG — Oman issues Law for Special Economic Zones and Free Zones (RD 38/2025)](https://kpmg.com/om/en/home/insights/2025/06/oman-issues-law-for-special-economic-zones-and-free-zones.html)
- [Zawya — OPAZ issues Executive Regulations (Regulation 81/2026)](https://www.zawya.com/en/economy/oman-opaz-issues-executive-regulations-for-special-economic-and-free-zones-law-1020763)
- [Gulf News — Oman-UAE rail link trial operations in late 2027](https://gulfnews.com/world/gulf/oman/oman-uae-rail-link-to-begin-trial-operations-in-late-2027-1.500676388)
- [PwC — Oman introduces Personal Income Tax](https://www.pwc.com/m1/en/services/tax/me-tax-legal-news/2025/oman-introduces-personal-income-tax.html)