Khazaen Free Zone: A Strategic Investment Hub in Oman

Khazaen Free Zone is part of Khazaen Economic City in Barka, South Al Batinah — a government-backed logistics and industrial development between Muscat and Sohar with an inland dry port linked to Sohar Port. A royal decree in 2023 created two free zones inside the city (together about 52 million m²), supervised by OPAZ. Companies there can be 100% foreign-owned, import without customs duty and, under the 2025 zones law, receive a 10-year income tax exemption.

It suits distributors, logistics companies and light manufacturers who want to be close to Muscat, the country's largest consumer market, while keeping free zone benefits for imports and re-exports.

What is Khazaen Free Zone?

Khazaen Economic City is a master-planned development owned by the Government of Oman through the ASYAD Group, covering roughly 51 million m² near Barka. Its plan combines:

• Industrial areas for manufacturing, packaging, assembly and repairs
• Logistics and warehousing, including the dry port
• Business areas for offices, banks and professional services
• Residential, retail and social infrastructure

In July 2023 a royal decree established two free zones within the city:

1. A zone for light and medium industries and logistics
2. A zone for business and trade

The zones are supervised by the Public Authority for Special Economic Zones and Free Zones (OPAZ), operated by Oman Logistics Company and developed by Khazaen Economic City Company. The decree also allowed customs and tax exemptions in the city and the sale of residential and commercial land.

Because the city has both free zone and non-free-zone areas, investors can choose between free zone status and a mainland-style licence in the same location. For the city as a whole, see our Khazaen Economic City page; for the free zone itself, see Khazaen Free Zone.

Where is Khazaen and why does the location matter?

Khazaen sits near the intersection of the Muscat Expressway and the Batinah Highway, in the Wilayat of Barka. That gives:

• Road access to Muscat and its airport, and to the UAE border through the Batinah coast
• Port links: the dry port is designed for customs pre-clearance, so containers cleared at Khazaen can move directly to vessels at Sohar Port
• Proximity to the Muscat market, where most of Oman's population and retail demand is concentrated

For a distribution business, this means storing goods duty-free close to Muscat and clearing them into the market only when sold, or re-exporting through Sohar without double handling.

What incentives does Khazaen Free Zone offer?

Since April 2025, all Omani free zones follow the Special Economic Zones and Free Zones Law (Royal Decree 38/2025). For Khazaen Free Zone companies this means:

Excluded from the tax exemption: banks, insurers, telecoms, construction and land and sea transport companies. The executive regulations issued in 2026 add automatic licensing and renewal when documents pass checks.

Promotional packages (such as lease discounts) have been offered in the past, but they change; ask for the current offer in writing.

Which businesses fit Khazaen Free Zone?

Good fit

• Regional distributors importing consumer goods for Oman and the GCC
• Third-party logistics, freight forwarding and warehousing
• E-commerce fulfilment and last-mile distribution for Muscat
• Light and medium manufacturing, assembly and packaging
• Trading companies handling re-exports through Sohar Port

Less suitable

• Heavy industry that needs a deep-water port next to the plant — consider Sohar Free Zone or Duqm SEZ
• Pure services sold to Omani customers, which usually work better as a mainland company
• Factories that sell almost entirely in Oman, which may do better in a Madayn industrial city such as Rusayl or Sohar Industrial City

Khazaen vs other Omani zones

If you are deciding between the main zones, read investment opportunities in Oman free zones, and if you are building a factory see Khazaen Economic City factory set-up.

How to set up a company in Khazaen Free Zone

1. Define the activity and space needs — warehouse size, yard, office, or a land plot for your own building.
2. Submit an application to the zone with a short business plan: activities, investment, staff, space and target markets.
3. Receive approval and a lease offer for a ready unit or land plot.
4. Prepare corporate documents — choose an SPC, LLC or branch structure; foreign corporate shareholders need attested documents.
5. Sign the lease with the zone operator.
6. Obtain the commercial registration and free zone licence.
7. Open a bank account, register with the Tax Authority and apply for visas for investors and staff.

For land projects, add design approvals, environmental permits and utility connections, which extend the timeline to several months.

What does it cost to set up in Khazaen Free Zone?

Khazaen quotes most charges on application, according to activity and space. Budget for:

• Application, registration and annual licence fees
• Warehouse or office rent, or a land lease per m² per year
• Service charges and utility connections
• Customs registration and bonded-warehouse arrangements, if needed
• Visa and labour costs for staff
• Attestation, translation and professional fees

Ask for a written quotation that lists every recurring charge, not just the first-year rent.

Risks and points to check before committing

• Ramp-up stage: Khazaen is still being built out, so confirm which facilities (dry port services, utilities, customs presence) are operating for your activity today.
• Local sales: price in customs duty and VAT for goods leaving the zone for the Omani mainland.
• Omanisation: free zone companies have Omanisation targets that increase over time.
• Transitional rules: incentive conditions are being finalised under the 2026 regulations; get your tax position confirmed in writing.

Oman Register can request current terms from Khazaen, compare them with other zones and handle the registration and visas. For an overview of all zones, visit our free zones hub.