Discounts Offered by UAE Free Zones During the Pandemic
The Covid-19 pandemic had far-reaching consequences beyond the spread of the disease and efforts to quarantine it. What started as a series of sudden stops in economic activity, quickly transformed into a worldwide financial crisis pushing policy makers to find ways to respond to it.
In light of these “exceptional circumstances” surrounding the global coronavirus pandemic, the United Arab Emirates (UAE), boosted the size of its stimulus packages in an initiative to swipe off the impact of the coronavirus. Dubai unveiled economic incentive packages to reduce business costs and improve financial liquidity of companies operating within its free zones.
What are the different packages and discounts offered by UAE free zones during the pandemic?
A number of free zones, in coordination with the Dubai Free Zones Council contributed to the UAE stimulus packages.
Five main measures were essentially implemented:
- Postponing rent payments;
- Offering payment installments;
- Refunding security deposits and guarantees;
- Cancelling fines for both companies and individuals; and
- Permitting temporary contracts that allow free movement of labor between companies operating in the free zones for the rest of the year.
- Dubai Silicon Oasis (DSO)
To support businesses’ endurance and overcome the effects of the current economic slowdown, the DSO Authority, the regulatory body for DSO, introduced several exemptions, incentives and flexible payment plans for companies, commercial renters, and residents inhabiting authority-owned buildings, including:
- Offering rent waivers to the retail sector notably for those affected by the closure (ex. restaurants, gyms, and shops);
- Exemption from late payment fines until August 31, 2020;
- Discounts up to 10% of the rental value upon renewal, and an additional 5% discount on the annual rent when paid on time; and
- A reduction of 25% on marketing fees.
- Dubai Airport Free Zone Authority (DAFZA)
To mitigate the severity of the economic impact and precautionary measures the world is facing, several initiatives were adopted in DAFZA, including:
- Postponing lease payments for up to three months;
- Ease financial payments into monthly instalments.
- Refunding security deposits on the leased spaces;
- Guarantying labor to companies;
- Exempting companies from registration and licensing fees; and
- Cancelling companies’ fines.
- Jebel Ali Free Zone (JAFZA)
Jebel Ali Free Zone announced a 50-70% reduction on business-related fees for registration, licensing and administrative related charges.
- Dubai World Trade Centre (DWTC)
The DWTC Authority (DWTCA) introduced a series of measures to maintain the sustainability of businesses in the width of recessionary pressures triggered by the COVID-19 pandemic. The measures included:
- Zero cancellation and/or rescheduling fees, and no penalties for late payments;
- Full refund on cancelled event for exhibitors;
- Up to 6-month rent-free on base rent for retail tenants;
- Up to 3-month base rent deferment for DWTCA commercial tenants;
- 70% refund on annual fees for all category-specific business registrations and licenses;
- 50% refund on annual fees for general trade licenses and registrations; and
- 0% administration fee on visas.
- Dubai International Financial Center (DIFC)
DIFC introduced the following five initiatives:
- Waiving annual license fees for new companies during the first three months of the pandemic;
- Offering a 10 % discount on renewal fees for existing licenses during that same period;
- Postponing payment plans for all commercial properties owned by DIFC investments for a period of 6 months;
- Reducing its ownership transfer fees from 5% to 4% for any property sale that occurs within the authorized three-month period, if ownership transfers are registered at the DIFC within 30 days after the end of the three-month period.
- Dubai Development Authority (DDA)
According to the director-general of the DDA and group CEO of Tecom Group, companies can:
- Postpone payments;
- Cancel all fines on expired licenses and other financial and administrative fees;
- Refund security deposits and guarantees to enhance their liquidity; and
- New firms can postpone their lease periods and cancel their registration fees for a period of six months.
- Dubai South
The package offered by Dubai South includes:
- Waiving fees on residential lands and expired licenses;
- Facilitating payments through monthly checks; and
- Exempting licensing fees for the first year.
- Meydan City Corporation
Meydan City Corporation introduced a package of initiatives which includes:
- Waiving fines on expired licenses;
- Facilitating payments installments; and
- Waiving licensing fees for the first year of registration.
- Dubai Multi Commodities Center (DMCC)
DMCC offered a wide range of exemptions, including:
- 30 % discounts on license renewal and amendment fees for its 17,000 registered companies;
- Reducing registration fees by 50% for new companies joining the center;
- Waiving late license renewal penalties;
- Waiving the flexi desk and DMCC business center penalties until the end of 2020;
- Waiving outdoor area rents for Jumeirah Lakes Towers (JLT) retailers with existing contracts, where DMCC is the building owner/landlord;
- Waiving rent for two months for commercial establishments requiring a temporary closure, where DMCC is the building owner/landlord;
- Suspension of three-month rent expenses for flexi desks;
- 80% reduction on the total company setup fee if the shareholders are residents of JLT;
- Flexible payment options for new DMCC Business Centre tenants; and
- Complete digital process for business setup.
The Covid-19 measures and initiatives, implemented by the Dubai Free Zones Council, align with UAE’s efforts to remain a multifaceted country and a startup ecosystem for new evolving businesses.
Despite the economic turmoil in the neighboring Arab countries, and the dramatic losses arising from the pandemic’s, UAE managed to lessen the economic trauma, reinforce stability and economic openness and ensure business continuity for companies in all sectors, especially small and medium companies.