The government of Dubai and the Department of Economic Development of Abu Dhabi announced the temporary cancellation of corporate fines for companies which did not extend the validity of their licenses in time.
The decision of the cancellation of fines by the end of 2018 was made together with the announcement of plans to simple the law on the ownership of companies by foreign citizens and provide an opportunity for a long stay in the UAE for expats. As experts noted, this is clear evidence that the government wants to support the business community in every possible way.
In Dubai, the Department of Economic Development will free companies from paying fines for overdue licenses until the end of 2018. In Abu Dhabi, a decision was made to abolish fines for such companies, which licenses are overdue for more than 24 months. This will be an additional incentive for UAE companies, which faced high operating costs and consequences of a difficult economic period.
The Department of Economic Development cancels various fines for commercial violations, while the size of some fines can reach several thousand dirhams.
It is expected that GDP in 2018 and 2019 will grow by 2.7% and 3.1% respectively.
The temporary cancellation of fines is not particularly significant by itself, as it will be beneficial only for such companies that failed to renew their licenses in time. However, it is important in the overall context of the economic situation.
The UAE traditionally ranks first among the countries of the Middle East in the annual World Bank report on the ease of doing business. At the same time, the government has recently introduced mechanisms to reduce costs, for example, motivating the free zones to reduce their registration fees and assisting small and medium-sized start-ups in their development. The abolition of corporate fines is in line with the government’s overall strategy to stimulate economic activity and support the corporate sector, which still faces a number of challenges.
These measures are taken by the government just at the time when most small and medium-sized enterprises are concerned about high operating costs in a slow pace of market development.
The Department of Economic Development warns companies about the need to extend their licenses before the expiration of the grace period.
It is expected that the innovations will have a positive impact on economic growth and the consolidation of Dubai’s position as one of the key international, commercial and economic centers.