State Council reviews economic zones draft law
Published: 02:12 PM,Dec 24,2024 | EDITED : 06:12 PM,Dec 24,2024
The proposed changes would extend the exemption period for strategic projects to a maximum of 10 years
24 December 2024
Muscat:The State Council held the opening of the fifth session of the second session of the eighth term of the Council to discuss the “Draft Law on Special Economic Zones and Free Zones” yesterday in Muscat.
The session was headed by Sheikh Abdulmalik bin Abdullah al Khalili, Chairman of the Council, in the presence of the honorable members of the Council and the Secretary-General.
The draft law aims to unify the system of guarantees, benefits, incentives, exemptions, and facilities granted to economic activities and helps develop income tax exemption policies to be an attractive element for strategic projects in the Sultanate of Oman.
The Shura Council referred the draft law on special economic zones and free zones to the State Council on November 13, 2024. In this context, the Economic and Financial Committee held a number of meetings and hosted specialists from the General Authority for Special Economic Zones and Free Zones to answer questions about the draft law.
The draft law included 49 articles and 6 chapters, with four new articles added by the Shura Council. It was agreed to amend two articles of the draft law with the Shura Council, and a new article was added by the Shura Council. However, there was disagreement with 20 articles of the draft law, and three new articles were added by the Shura Council.
The number of articles approved by the Shura Council and the Economic and Financial Committee without amendment was 27 articles, as stated in the draft law.
Dr Dhafer bin Awad al Shanfari, Chairman of the Economic and Financial Committee, stated in his speech that the development of legislation and regulation of special and free economic zones is an extension of the results of the country’s economic and industrial policies that began in 1970. The establishment of free zones also came through the issuance of the Free Zones Law pursuant to Royal Decree No. (56/2002), which is considered an important legal nucleus in the process of developing these zones. This law addressed general provisions that organize and determine incentives, benefits, and facilities for the operating entity and operating companies, and mechanisms for the transfer of goods to and from these zones.
He also added that the project aims to unify the legislative system for these areas so that they are under one umbrella, ensuring the consistency of the provisions of the applicable legislation and regulations, and facilitating the Authority’s exercise of its supervisory and regulatory role. This undoubtedly ensures, on the other hand, the unification of investment procedures in all existing areas or those that will be established in the future, and grants the Authority sufficient flexibility in dealing with future expansion in establishing economic zones and free zones. It also determines the regulatory frameworks for projects within them and how to obtain the necessary licenses, permits, and approvals to carry out their activities. The project also provides a new regulation related to real estate development projects, which are considered an addition to the various economic sectors in special economic zones and free zones.
Al Shanfari added that the draft law seeks to develop income tax exemption policies to be an attractive element for strategic projects, as the tax exemption period has been amended to be for a period not exceeding ten years, extendable for two similar periods, and is closely linked to the size of the project and its added value. It aims to unify the guarantees, benefits, incentives, exemptions, and facilities granted to economic activities in special economic zones and free zones together, while distinguishing between economic zones when required.
According to UNCTAD statistics in the World Investment Report 2019, the growth and spread of economic and free zones have been steadily increasing in recent years, reaching about 5,400 special economic zones before the Covid-19 crisis. The same source indicates that these zones have increased by more than a thousand zones (SEZs) annually in the last five years, indicating the frenzied competition to establish these zones internationally.
“There is no doubt that competition for investment and attracting foreign investment has recently accelerated, as all countries share in this proposal and participate in attracting investment, especially strategic investments. It has become necessary for countries to take this path in strengthening these legislations and laws to attract investment and make it of strategic value. Attracting investment adds value to small and medium enterprises and also facilitates knowledge transfer. Therefore, it has become necessary for this law to include part of the incentives and part of this development. These laws have also become a differential advantage by establishing economic cities. Through these economic cities, the legislator found it necessary to integrate some other legislations concerned with real estate development that would help develop these areas,” said Dr Amer bin Nasser al Mutaani, Vice Chairman of the Economic and Financial Committee.
It is worth noting that the draft law emphasizes the importance of having an integrated legislative umbrella and avoiding overlaps between the legislative laws regulating free and private zones and industrial zones, in order to attract foreign investments and develop and advance local industries.
The session concluded its work by reviewing the General Secretariat’s report on the Council’s bodies and activities.
Muscat:The State Council held the opening of the fifth session of the second session of the eighth term of the Council to discuss the “Draft Law on Special Economic Zones and Free Zones” yesterday in Muscat.
The session was headed by Sheikh Abdulmalik bin Abdullah al Khalili, Chairman of the Council, in the presence of the honorable members of the Council and the Secretary-General.
The draft law aims to unify the system of guarantees, benefits, incentives, exemptions, and facilities granted to economic activities and helps develop income tax exemption policies to be an attractive element for strategic projects in the Sultanate of Oman.
The Shura Council referred the draft law on special economic zones and free zones to the State Council on November 13, 2024. In this context, the Economic and Financial Committee held a number of meetings and hosted specialists from the General Authority for Special Economic Zones and Free Zones to answer questions about the draft law.
The draft law included 49 articles and 6 chapters, with four new articles added by the Shura Council. It was agreed to amend two articles of the draft law with the Shura Council, and a new article was added by the Shura Council. However, there was disagreement with 20 articles of the draft law, and three new articles were added by the Shura Council.
The number of articles approved by the Shura Council and the Economic and Financial Committee without amendment was 27 articles, as stated in the draft law.
Dr Dhafer bin Awad al Shanfari, Chairman of the Economic and Financial Committee, stated in his speech that the development of legislation and regulation of special and free economic zones is an extension of the results of the country’s economic and industrial policies that began in 1970. The establishment of free zones also came through the issuance of the Free Zones Law pursuant to Royal Decree No. (56/2002), which is considered an important legal nucleus in the process of developing these zones. This law addressed general provisions that organize and determine incentives, benefits, and facilities for the operating entity and operating companies, and mechanisms for the transfer of goods to and from these zones.
He also added that the project aims to unify the legislative system for these areas so that they are under one umbrella, ensuring the consistency of the provisions of the applicable legislation and regulations, and facilitating the Authority’s exercise of its supervisory and regulatory role. This undoubtedly ensures, on the other hand, the unification of investment procedures in all existing areas or those that will be established in the future, and grants the Authority sufficient flexibility in dealing with future expansion in establishing economic zones and free zones. It also determines the regulatory frameworks for projects within them and how to obtain the necessary licenses, permits, and approvals to carry out their activities. The project also provides a new regulation related to real estate development projects, which are considered an addition to the various economic sectors in special economic zones and free zones.
Al Shanfari added that the draft law seeks to develop income tax exemption policies to be an attractive element for strategic projects, as the tax exemption period has been amended to be for a period not exceeding ten years, extendable for two similar periods, and is closely linked to the size of the project and its added value. It aims to unify the guarantees, benefits, incentives, exemptions, and facilities granted to economic activities in special economic zones and free zones together, while distinguishing between economic zones when required.
According to UNCTAD statistics in the World Investment Report 2019, the growth and spread of economic and free zones have been steadily increasing in recent years, reaching about 5,400 special economic zones before the Covid-19 crisis. The same source indicates that these zones have increased by more than a thousand zones (SEZs) annually in the last five years, indicating the frenzied competition to establish these zones internationally.
“There is no doubt that competition for investment and attracting foreign investment has recently accelerated, as all countries share in this proposal and participate in attracting investment, especially strategic investments. It has become necessary for countries to take this path in strengthening these legislations and laws to attract investment and make it of strategic value. Attracting investment adds value to small and medium enterprises and also facilitates knowledge transfer. Therefore, it has become necessary for this law to include part of the incentives and part of this development. These laws have also become a differential advantage by establishing economic cities. Through these economic cities, the legislator found it necessary to integrate some other legislations concerned with real estate development that would help develop these areas,” said Dr Amer bin Nasser al Mutaani, Vice Chairman of the Economic and Financial Committee.
It is worth noting that the draft law emphasizes the importance of having an integrated legislative umbrella and avoiding overlaps between the legislative laws regulating free and private zones and industrial zones, in order to attract foreign investments and develop and advance local industries.
The session concluded its work by reviewing the General Secretariat’s report on the Council’s bodies and activities.