Photo: Dubai Mall with the Burj Khalifa in the background in Dubai, UAE, on Jan 15, 2020. Marcio Jose Bastos Silva/Shutterstock

Islamic Finance

Dubai hopes 1.5 bln dirhams stimulus will help businesses facing economic challenges, COVID-19 impact


The government of Dubai on Mar 12 launched an economic stimulus package worth 1.5 billion dirhams ($408.44 million) it hopes will support companies and the business sector reduce the impact of the current challenging economic situation.

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the crown prince of Dubai and chair of the Executive Council of Dubai said the challenges faced by the global economy have been “exacerbated” by the worldwide outbreak of the COVID-19.

UAE has been proactive in taking preventive and precautionary measures to curb the spread of COVID-19, steps that have an impact across sectors of the economy. 

“The stimulus package seeks to reduce the cost of doing business and simplify business procedures, especially in the sectors of tourism, retail, external trade and logistics services,” the government said.

The stimulus measures will come into effect immediately and they will be valid for the next three months. Their impact will be reviewed thereafter.

The package includes 15 initiatives focused on the commercial sector, retail, external trade, tourism, and the energy sector. 

The initiatives include:

  • Commercial and business sector: Nine initiatives over the next three months including a freeze on the 2.5% market fees levied on all facilities operating in Dubai. The fees were reduced from 5% to 2.5% in June 2018. The second initiative extends a refund of 20% on the custom fees imposed on imported products sold locally in Dubai markets.

 

  • Commercial and business sector: Cancellation of the 50,000 dirhams bank guarantee or cash required to undertake customs clearance activity. Bank guarantee or cash paid by existing customs clearance companies will be refunded. Fees imposed on submitting customs documents of companies will be reduced by 90%.

 

  • External trade: The requirement for providing a banking instrument while submitting customsrelated grievances has been cancelled. Traditional wooden commercial vessels registered in the country will be exempted from mooring service fees for arrival and departure, as well as direct and indirect loading fees at Dubai Harbour and Hamriyah Port.

 

  • Local commerce: there will be a cancellation of the 25% down payment required for requesting installmentbased payment of government fees for obtaining and renewing licenses. Commercial licenses can be renewed without mandatory renewal of lease contracts in a move aimed at stimulating business activity and easing government-related procedures. Companies will also be exempted from permits for new sales and offers.

 

  • Tourism: there will be a reduction of municipality fees imposed on sales at hotels from 7% to 3.5%. In 2018, the fees were reduced from 10% to 7%. Companies will also be exempt from fees charged for postponement and cancellation of tourism and sports events scheduled for the year 2020. The third initiative freezes fees for the rating of hotels. The fourth initiative freezes the fees charged for the sale of tickets, issuance of permits and other government fees related to entertainment and business events.

 

  • Reduction in utility bills: The stimulus package also features two other initiatives that seek to reduce the cost of living and doing business for citizens, expatriate residents and the business community through 10% reduction in water and electricity bills including those charged in the residential, commercial and industrial sector, for a period of three months. The second initiative reduces deposit paid for water and electricity connections by 50%.

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