Why businesses relocate from Dubai to Muscat — and what they get wrong

There is a widely repeated story that businesses are leaving Dubai for Muscat. We went looking for the evidence in Oman's own investment statistics and could not find it. Emirati capital is a rounding error in Oman's foreign investment stock and it shrank in the most recent year for which a breakdown exists. That does not make Oman a bad place to set up — several of the arguments for it are real and checkable — but it does mean the premise of most articles on this subject is unsupported.

What the investment numbers actually show

Oman's National Centre for Statistics and Information publishes foreign direct investment stock by country of origin quarterly. This is the right place to look, because a genuine corporate migration from one country to another shows up as inward investment from that country. Here is the Q3 2025 breakdown, on a total FDI stock of OMR 30.948 billion, up 16.2% year on year.

Two things in that table are worth sitting with. The UAE is the smallest of the five and the only one going backwards. And the sectoral split explains most of the rest: oil and gas accounts for OMR 24.9 billion, or 80.5% of all foreign investment in Oman, with manufacturing at OMR 2.715 billion (8.8%), financial intermediation at OMR 1.483 billion (4.8%) and everything else at OMR 2.0 billion (6.5%). The United Kingdom's dominance is a legacy energy position, not a wave of new British companies.

The quarterly cuts do not agree perfectly, and we are not going to smooth that over. The Q1 2025 breakdown from the same statistical agency puts UAE-origin stock at OMR 753 million, the UK at OMR 15.6 billion or 51% of the total, the US at OMR 7.8 billion, China at OMR 895 million, and oil and gas at 81%. Whether UAE stock is OMR 753 million or OMR 635 million depends on which quarter you take. What does not change is the order of magnitude — roughly two per cent of the total, on our arithmetic — and the absence of any upward trend.

Nor is the flow of new projects large in absolute terms. Oman's FDI stock reached OMR 32.2 billion in Q1 2026, up 8.7%, with OMR 2.5 billion of new inflows in the quarter. The government's own Invest Oman platform reports facilitating 45 projects worth OMR 4 billion in total between 2023 and mid-2026 — roughly OMR 1.2 billion a year against a stock of OMR 32 billion. Real activity, and a fraction of the size the relocation narrative implies.

The traffic that is documented runs the other way. UAE reporting for 2025 names PayPal establishing a Dubai regional headquarters, Veon relocating its global headquarters, and Partners Group, Bitcoin.com and Fortress Investment Group opening or expanding there, citing the Kearney FDI Confidence Index 2025 and the IMD World Competitiveness Yearbook 2025. Note the limitation honestly: that reporting names five companies and publishes no aggregate count, and no statistical authority on either side publishes a total number of headquarters relocations. Nobody's numbers are complete here. But five named cases in one direction and none in the other is still a signal.

Who writes the articles that say otherwise

Almost every page arguing that businesses are moving from Dubai to Oman is published by a firm that gets paid when you make the move — company formation agents, golden-visa brokers, corporate service providers, audit firms selling incorporation packages. This is not a conspiracy; it is simply who has a commercial reason to produce content on the question. It does mean that the answer is decided before the research starts.

One example, chosen because it is typical rather than because it is the worst. A widely shared 2026 article headlined on expats and businesses choosing Muscat over Dubai asserts a growing migration and offers, as its stated evidence, "expat Facebook groups, WhatsApp chats of professionals… spreadsheets of families". It publishes detailed rent comparison tables with no source attached to any figure. It promotes named residential developments and links to investment-promotion portals. It carries no disclosure of whether the publisher has an interest in Omani property, relocation or company formation. It reads as persuasion, and it ranks well.

The real cost differences, and how large they actually are

Office rent

This is the one where the gap is genuinely wide. Savills' Q1 2026 Oman report gives average Muscat office rents of OMR 2.0 per square metre per month in the CBD, OMR 3.5 in Qurum, OMR 4.5 in Al Khuwair and OMR 6.0 in Shatti Al Qurum, with Ghubrah and Azaiba described as stable. The same report puts Oman's Q1 2026 property transaction value at OMR 678 million, up 18.4% year on year.

For Dubai, a Q1 2026 office market report puts the average at AED 216.8 per square foot per year, up 19.55% year on year, on new supply of only 10,240 square metres in the quarter. CBRE's Q1 2026 UAE review describes both Dubai and Abu Dhabi as operating under tight supply with high occupancy and double-digit annual rental growth, without publishing rates in its free summary.

Converting those to a common basis — this arithmetic is ours — Al Khuwair at OMR 4.5 per square metre per month is OMR 54 per square metre a year, about USD 13 per square foot a year. Shatti Al Qurum works out at about USD 17 per square foot. Dubai's AED 216.8 is about USD 59 per square foot. So Dubai is somewhere between three and a half and four and a half times Muscat on office rent.

Electricity

Oman's Authority for Public Services Regulation applies a flat 25 baisa per kilowatt-hour to non-residential customers at all consumption levels, with large users above 100 megawatt-hours a year moving onto annually reviewed cost-reflective tariffs. DEWA's published Dubai slabs run 23, 28, 32 and 38 fils per kilowatt-hour, plus a fuel surcharge of 6.0 fils as at August 2026, plus 5% VAT. On our arithmetic that is roughly USD 0.065 per kilowatt-hour in Oman against USD 0.08 to USD 0.12 in Dubai before VAT. A real advantage, and for almost any business other than a data centre or a smelter, not a reason to move a company.

Cost of living, and wages

Numbeo's Muscat-versus-Dubai comparison — a crowd-sourced perception and price survey, resting on 62 Muscat contributors against 308 for Dubai as at June 2026 — puts Dubai 33.2% higher excluding rent, 83.4% higher including rent, with rents 270.9% higher, restaurants 72.5% higher and local purchasing power 32.6% higher.

The shape of that is more useful than the headline. Groceries are only 3.3% apart. Almost the entire cost-of-living gap between the two cities is rent. If your staff are on housing allowances, the saving is real and it lands on your payroll; if they are not, the difference to their daily spending is much smaller than the headline suggests, and Dubai's higher local purchasing power partly offsets it.

Wages are the line most cost comparisons omit, and it runs against Oman. The IMF's 2025 analysis of the Omani labour market finds that Omani wages are on average around twice those of expatriate workers in comparable roles. Foreign workers are 68% of total employment and 86% of private-sector employment, concentrated at the lower-skilled end — under 15% of the workforce in tourism and construction is Omani. An Omanisation-compliant payroll in Oman is therefore not automatically a cheap payroll, and the more you localise the less true it becomes.

Mistake one: Oman is not a low-tax UAE clone

Oman's standard corporate income tax is 15%. The UAE's is 0% on taxable income up to AED 375,000 and 9% above it, for financial years beginning on or after 1 June 2023. Oman does have a reduced 3% rate, but the conditions are severe: registered capital not exceeding OMR 60,000, gross income not exceeding OMR 150,000, an average of no more than 25 employees, and exclusion of air and sea transport, extractives, banking, insurance, financial services and public utility concessions. Almost no business relocating from Dubai will meet all four. Petroleum income is taxed at 55%.

Above the multinational threshold the two converge. Oman applies an Income Inclusion Rule from 1 January 2025 under Royal Decree 70/2024 for groups with consolidated revenue of at least EUR 750 million, and the UAE applies a Domestic Minimum Top-up Tax at a 15% minimum effective rate under Cabinet Decision 142 of 2024, for financial years starting on or after 1 January 2025, at the same EUR 750 million threshold. For a large group the UAE's headline 9% is not 9%. For a mid-sized company it still is, and that is where the genuine tax difference lives. Our Oman and UAE comparison works through the mechanics.

Then there is the change most comparisons predate. Royal Decree 56/2025, issued 22 June 2025, introduces a 5% personal income tax from 1 January 2028 on income above OMR 42,000 a year. A tax resident — more than 183 days in Oman in the tax year — is taxed on worldwide income; non-residents on Omani-source income only. If you are moving because the Gulf has no personal income tax, note that Oman is the first GCC state to legislate one, and that founders drawing above the threshold are squarely in scope.

Mistake two: Oman's negative list is not comparable to UAE openness

Both countries allow 100% foreign ownership. They are moving in opposite directions, and the direction matters more than the headline. On 28 August 2024 Oman's Ministry of Commerce, Industry and Investment Promotion issued Ministerial Decision 435/2024, adding 28 activities reserved exclusively for Omani investors and bringing the total number of activities prohibited to foreign investment to 123. UNCTAD classifies the measure as an entry restriction less favourable to foreign investors.

The reserved list is usually described as artisanal, which understates it. Alongside handicrafts in leather, wood, silver, copper and pottery, frankincense products and traditional textiles, it reaches into ordinary commerce:

• Labour recruitment, real estate brokerage and customs clearance
• Driving schools and certain vehicle repair services
• Grocery shops and fresh produce retail, and mobile coffee shops
• Arabian clothing tailoring, skin care services and plant nurseries
• Event supply rental and certain transport services
• Existing foreign investments in newly restricted sectors may continue, but cannot be transferred to a new foreign owner without ministerial approval

The UAE side is structurally different. Federal Decree-Law 26 of 2020, amending the Commercial Companies Law, removed the requirement for a majority Emirati shareholder or agent for onshore companies. Activities of strategic impact remain excluded, and the Cabinet mandates a committee to propose which those are — but u.ae publishes no enumerated federal list, noting only that Dubai's guidelines exclude activities in seven strategic sectors and directing readers to individual emirate authorities. So the honest comparison is: Oman names 123 prohibited activities and has added to the list as recently as August 2024; the UAE removed its blanket restriction and keeps a narrow, unenumerated strategic carve-out. Check your specific activity code before anything else. Our restricted activities guide covers how to do that.

Mistake three: Omanisation is not Emiratisation

The two are usually described as the same policy with different names. They are not, and the difference is in what is published. The UAE government's own portal sets out, for companies with 50 or more employees, an increase of 2 percentage points a year in skilled roles toward an overall 10% by 2026, and a financial contribution for non-compliance of AED 6,000 a month per Emirati not appointed from 2023, rising by AED 1,000 a year to AED 9,000 in 2026. Companies with 20 to 49 employees in 14 specified sectors must hire one Emirati from 2024 and two from 2025, with penalties of AED 96,000 and AED 108,000 respectively.

Now the Omani side. There is no comparable published schedule. The rules reported in May 2025 are procedural rather than numerical: a company operating for a year or more with no Omani employee must file an employment plan within a month and hire at least one Omani, with three months to comply for firms of 10 or more employees, six months for smaller ones and a year's exemption for sole proprietors. The reported baseline is that around 1,000 large firms average 44% Omanisation, around 19,000 smaller establishments sit below 17%, and more than 245,000 businesses have no Omani employees at all. No per-worker fine schedule is published alongside any of it.

One correction to the "Oman publishes nothing" version of this, because it is not quite true. Zone-level minimums are published: a guide to Oman's economic and free zones gives Sohar at 15% for the first ten years, Salalah at 20%, Al Mazunah at 20%, Duqm at 25% and Knowledge Oasis Muscat at 25%. Note a conflict there too — our Omanisation guide cites Duqm's own authority at 10%, against 25% in the law firm guide. Both are in print. What Oman does not publish is a general, current, enforceable table of sector percentages for the mainland with tariffed penalties attached, which is exactly what the UAE does publish.

And there is one Omani exposure with no Emirati equivalent in the same form. Royal Decree 53/2023, the Labour Law, expressly permits an employer to terminate a non-Omani employee where the reason is to replace them with an Omani national. If you are relocating a team, that clause belongs in your risk register before the tax rate does.

Free zones: do not print "thirty-year tax holiday"

Royal Decree 38/2025, issued 7 April 2025 and effective 14 April 2025, unified Oman's special economic zone and free zone framework. It provides a 10-year income tax exemption from commencement of operations, renewable for two further like periods for activities deemed to be of a special nature. Banks, financial institutions, insurance and reinsurance companies, telecommunications providers, contracting companies and road and maritime transport businesses are excluded from the exemption. Goods used in construction and operation are exempt from customs tax, exports from the zones carry no duties, and real estate developers in the zones may sell units freehold to non-Omanis.

Pre-2025 guides give different numbers — 30 years for Salalah, Al Mazunah and Duqm, and 25 years for Sohar. Those figures are still circulating and may reconcile with the new law, since ten years renewed twice also reaches thirty. We cannot confirm that they do. The defensible position is that the current statutory default for a new entrant is ten years, with renewal on stated conditions. If a formation agent quotes you thirty years flat, ask which instrument they are reading.

The market you would be trading away

Scale is the argument nobody in this debate wants to make, so here it is. Oman's population was 5,388,513 at the end of May 2026, growing 1.6% a year, with Muscat Governorate holding 1,538,312 people, or 28.6% of the country. The UAE's was 11,294,243 in 2024 on the Federal Competitiveness and Statistics Centre's figures, with Dubai alone at 4.01 million as at September 2025 — roughly three-quarters of Oman's entire population in one emirate. On GDP, Oman recorded OMR 42.14 billion at current prices in 2025, up 2.3%; the UAE recorded AED 1.9 trillion in 2025, up 6.2% with non-oil activity up 6.8%, reported as USD 517 billion. On our arithmetic at the rial's peg, that makes the UAE economy roughly 4.7 times the size of Oman's. If your business sells to the domestic market, that ratio is the whole decision.

The one structural argument that survives scrutiny

Oman's logistics pitch is not a marketing line, and it is the strongest thing on this list. Salalah and Duqm face the Arabian Sea and Sohar sits on the Gulf of Oman — all of them seaward of the Strait of Hormuz, which is a fact of geography rather than a claim anyone has to be trusted on. For a business whose supply chain runs through the Gulf, that is a genuine structural difference from a Jebel Ali routing. The volumes are real too: the Ministry of Transport, Communications and Information Technology reported 2,427,195 TEU across Salalah, Sohar and Duqm in the first half of 2025, up 11.7% year on year, on 70.1 million tonnes of cargo (up 5.2%) and 6,586 vessel arrivals (up 11.1%).

The honest caveat is that being outside the Strait is not the same as being outside the conflict envelope. Drone strikes have forced temporary suspensions at both Duqm and Salalah. What Omani ports offer is an alternative to a single chokepoint, not immunity from regional risk, and the two get conflated constantly by people selling warehouse space.

The honest summary

If you are moving a business to Oman, move it for a reason that shows up in the evidence: a port position outside Hormuz, a specific free zone regime that fits your activity, materially cheaper premises, lower government fees — Oman's own ministry puts establishment fees for small companies at OMR 200 to 300 with registration in 7 to 14 days — or a customer already there. Do not move it because you read that everyone is moving, because Oman's investment statistics do not show that happening. And do not move it for tax, unless you are above the multinational threshold or inside a zone, because below that the UAE is cheaper and from 2028 Oman also taxes personal income.

If you have decided on Oman for reasons that survive this article, the registration side is straightforward and we do it every day — commercial registration, activity codes, chamber membership, municipality licence and the labour clearances that follow. Our office is in Al Ghubra.