Dubai announces free zones economic stimulus package


The Dubai Free Zones Council announced an economic stimulus package covering all free zones in the Emirate that is designed to help businesses deal with the impact of the Covid-19 pandemic on the economy.

It aims to support the economic system by ensuring business continuity in all sectors, especially for small and medium enterprises. There are approximately 44,985 free zone companies in Dubai, generating 389,336 jobs and contributing 33% of the region’s GDP.

The initiative complements the AED1.5 billion package announced recently by Dubai to reduce business costs and improve the financial liquidity of companies operating in the free zones. The steps are also aimed at helping workers who have been asked to take unpaid leave by facilitating their re-employment in jobs in Dubai.

The new measures, which will apply from 1 April 2020 to 30 June, include five key elements:

  • Postponement of rent payments by a period of six months
  • Facilitating instalments for payments
  • Refunding security deposits and guarantees
  • Cancellation of fines for both companies and individuals
  • Permitting temporary contracts that allow the free movement of labour between companies operating in the free zones for the rest of the year.

“In the current exceptional circumstances, Dubai Free Zones are working together to highlight their strategic role and social responsibility to support Dubai’s economy,” Dubai government said in a statement.

Entities involved with the stimulus package include – Dubai Silicon Oasis Authority, Dubai Airport Free Zone Authority, Jebel Ali Free Zone, Dubai World Trade Centre, Dubai International Financial Centre (DIFC), Dubai Development Authority (DDA), Dubai South, Meydan City Corporation, and Dubai Multi Commodities Centre (DMCC).

Specifically, DIFC proposes implementing five initiatives over the next three months, including waiving annual licence fees for new companies during the next three months, and offering a 10% discount on renewal fees for existing licences during the same period.

DIFC will also postpone payment plans for all commercial properties owned by DIFC Investments for a period of six months and reduce its ownership transfer fees from 5% to 4% for any property sale that occurs within the authorised three-month period, if ownership transfers are registered at DIFC within 30 days after the end of the three-month period.

The DDA and TECOM Group are permitting companies to postpone payments and new firms can postpone their lease periods and cancel their registration fees for a period of six months. They can also cancel all fines on expired licences and other financial and administrative fees. The package further offers flexible fee payments, including building licences and services, in addition to refunding security deposits and guarantees.

The Dubai Aviation City Corporation and Dubai South are waiving fees on residential land and expired licences, facilitating payments through monthly checks and exempting licencing fees for the first year. Jebel Ali Free Zone Authority (JAFZA) is waiving fines on expired trade licences.

DMCC is offering exemptions on a wide range of fees for its 17,000 registered companies, including:

  • Waiver for late licence renewal penalties, the office sharing permit fee and company reinstatement fees
  • Waiver of all flexi-desk and DMCC business centre penalties until the end of 2020
  • 30% discount on licence renewal
  • Waiver of outdoor area rents for JLT retailers with existing contracts, where DMCC is the building owner/landlord
  • Waiver of rent for two months for commercial establishments requiring a temporary closure, where DMCC is the building owner/landlord
  • A three-month suspension of rent for Flexi Desk and DMCC Business Centre tenants renewals or monthly/quarterly instalment with no discount

Incentives for new registrations and companies already in the process of registering in DMCC include:

  • 80% reduction on the total company set up fee if shareholders are residents of JLT
  • Up to 50% reduction on the total company set up fee, along with a Flexi Desk for one year
  • Flexible payment options for new DMCC Business Centre tenants
  • Complete digital process for business set up

Sovereign has excellent relationships with all the Free Zone authorities and remains fully up-to-date with any changes to legislation and regulation. As a result we can assist you to understand your incorporation options and select the most suitable and sustainable Free Zone structure for you and your business.

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