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Pre-Emptive Beneficial Measures and Relief Schemes for Businesses and Individuals in the UAE amidst COVID-19 and its Aftermath

March 28, 2020

The current global outbreak of COVID-19 has been a cause for concern for both businesses and individuals alike. In order to protect and shelter businesses from the same, the Government of U.A.E. has set in place various schemes and initiatives to help businesses resolutely face the major financial crisis caused by the pandemic.

The “Targeted Economic Scheme” launched by the UAE Authorities will ensure that an AED 100 billion (USD 27 billon) package is offered to mitigate the economic impact of COVID-19 for banks. The Government of Dubai has launched an economic stimulus package of AED 1.5 Billion (USD 40 Million) to support businesses and SME companies in Dubai, in an endeavour to assist with the potential crises of liquidity and solvency on businesses.

The scheme will provide relief to all private sector companies and retail customers in the following manner:

✔ From April 1 until June 30, Dubai-based banks will offer relief in the payment of interest on loans.

✔ Banks will waive loan repayments for three months for individuals forced to take unpaid leave, and for small businesses. The immediate impact of this will be the rescheduling of loan payments, which will prevent such borrowers from defaulting on their payment obligations.

✔ The banks will be reducing the fees charged to vendors when their customers pay by debit or credit card, and will limit the fees charged to SME customers.

✔ A ten per cent reduction in DEWA Bills of water and electricity will be enforced, including those charged in the residential, commercial and industrial sector, for a period of three months.

✔ There will be a freeze on the market fee of 2.5% imposed on all facilities
operating in Dubai and on all businesses operating in the UAE, for the next three months.

✔ There will be a 20% refund of the customs tariff imposed at a rate of 5% on
goods imported and sold within the UAE.

✔ There will be a cancellation of the requirement to provide either bank or cash insurance for customs clearings, and a refund of any customs insurance up to AED 55,000.

✔ Changes will be made, in the renewal of trade licences for companies, wherein the process will be simplified.

✔ The tourism sector will benefit from four initiatives over the next three months, the first of which is the reduction of municipality fees imposed on sales at hotels, from 7 per cent to 3.5 per cent.

Currently, Banks such as Emirates NBD, Dubai Islamic Bank, Mashreq and along with others have introduced further financial relief measures based on the above Economic support schemes. These schemes will be implemented from 1 st April till 30 th June and could be extended if required, for a further period of time.

These schemes will individuals and companies, by offering refinancing and repayment deferrals, rescheduling outstanding loan payments and providing a waiver of interest payments in the coming months.

MBG will be able to provide guidance and advice to Companies and Individuals on the latest schemes and reforms, and the method of making requests to avail the same.

MBG will also assist in preparing Letters to the Banks requesting for deferment of loan repayments, or the waiver of interest payments on behalf of individuals and companies respectively as per the latest regulatory mandates.

Assistance can be provided, on negotiating with Landlords on the rentals which may be reduced or waived for a three month period, and the amending of contracts with Suppliers, Distributors, Maintenance Agreements, Employees, Insurance and others, to avail the benefits offered as per the schemes being provided.

MBG provides advisory services focused on understanding the benefits under each new scheme for this current situation of the Coronavirus crisis, by reviewing documents and applications to relevant authorities, vendors and other parties, so as to enable companies and individuals to avail these services.

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