Dubai Economic Stimulus Package

Apr 30, 2020

The Dubai Government has announced the injection of a AED 1.5 billion (US$ 400 million) economic stimulus package to support companies over the next three months and demonstrate that there is light at the end of the tunnel.

Retailers and Ecommerce can be buoyant about these new measures imposed by the Government and can take the following steps to take advantage of the initiatives:

1. Reduction in Custom Fees for Importers

Importers of goods for resale in the United Arab Emirates can take advantage of a 20% reduction in customs fees for the period up to July 2020. The UAE imports 90% of its sold goods: traditional retailers and those in E-commerce should consult their tier 1 and tier 2 suppliers to assess which goods can be imported during this period to take advantage of this governmental import support.

2. Target major exports to benefit from no customs duty deposit

High value goods for export, in particular, plant equipment, vehicles, oil and gas equipment and material should be planned for export during this stimulus period to take advantage of exporting without the cash burden of the AED 50,000 (approx.US$ 13,600) customs duty deposit.

Before the new measures were bought into place, the customs duty deposit was required for all high value exports planned from all Free Zones. Typically, a customs duty deposit can be held by the Port Authorities for up to 30 days after the goods have been shipped and certain export documentation such as the bill of lading must be presented before reimbursement. The temporary removal of the deposit will support SMEs in particular by enabling them to export without impacting their working capital and cash reserves for a period of time when liquidated cash is important.

3. Support with Dubai Electricity and Water Supply Bills

Companies and their business unit sites and offices can release much needed working capital with the 10% cut in electricity and water (DEWA) bills over the next three months.

During this time, businesses should review their electricity and water outputs to assess whether reductions could be extended by reviewing all utilities and usage to minimize costs.

Adopting working from home strategies can reduce the electricity costs incurred by a company.

4. Licencing Fees

Many government-controlled free zones have slashed their licencing fees and commercial lease rentals. For SMEs with a solid business model, this can prove a cost-effective time for expansion.

You can approach the free zones authorities directly or Prism Consultants can advise you of the best options for your operations.

The Ministry of Economy has discounted trademark registration fees making now a great time to register your business’ intellectual property.

The economic stimulus package applied by the authorities will support SMEs and MNCs in the short term. After this period of uncertainty, there will be an opportunity to review how some of these cost cutting measures could be used as a springboard to change the way businesses prime themselves to be ready for economic life after this pandemic.