Decree issued by Shaikh Mohammed exempts businesses, whose licence expired before 2012, from the imposed fines if they apply for licence cancellation

Dubai - The Government of Dubai announced on Tuesday that it would slash fines imposed on businesses in the emirate as part of an on-going drive to further enhance confidence among businesses and investors.

His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued Decree No (10) of 2015 that “aims to encourage businesses to rectify their status by cancelling or renewing their licences, update their information in the records of Dubai’s Department of Economic Development (DED) and provide accurate information about the number of active businesses in Dubai,” an official statement said.

The decree, which will have far reaching positive implications in reinforcing Dubai’s status as a competitive business and investment destination, also exempts businesses, whose licence expired before 2012, from the imposed fines if they apply for licence cancellation. Such fines are pro rata reduced, according to a table addendum to the decree, if the licence cancellation request is submitted within six months starting from the date of activation of the decree.

The Director-General of the DED may extend this grace period for another month only. The decree is to be published in the official gazette, and considered valid from the date of publication, said the statement. The statement, however, did not specify the rate of reduction in fines facilitated by the decree.

Sami Al Qamzi, Director-General, Department of Economic Development — Dubai, said the decree underscored the continued support of the government for the development of the business sector in the emirate. “It also shows His Highness’s keenness on eliminating all obstacles and challenges faced by business and on enhancing the emirate’s position as a competitive business and investment destination.”

“The decision to exempt defaulting companies from fines incurred due to non-renewal of licences beyond a specific period will enhance confidence in Dubai and its government among businesses as well as investors. The decree will reduce the burden on businesses, enabling them to continue their activities and focus on growing by taking advantage of Dubai’s competitiveness,” said Al Qamzi in a statement.

DED sources did not give an estimate of the number of business firms that would benefit from the fine reduction.

In 2012, a similar decree was issued to reduce fines of business establishments. According to that decree, fines payable were to be reduced by 20 per cent to 40 per cent depending on the period of default. In the first month after the decree was announced, at least 3,050 establishments used facility to renews and regularise their licence by paying slashed fines.

Businessmen welcomed the new decree as a pragmatic and prudent measure that would shore up investors’ confidence in Dubai as the emirate seeks to drastically improve its competitiveness and attraction as a global business hub.

James Mathew, Secretary-General of Indian Business and Professional Forum, said the timely move by the Dubai government brought relief to businesses that are struggling after defaulting on paying their licence renewal fees. “This move by the Government will positively impact Dubai SMEs who significantly contribute 60 per cent to the GDP (gross domestic product) of the emirate’s economy and account for almost 42 per cent of the total workforce in Dubai.”

“With bank lending being lower than five per cent towards SMEs, this decree brings relief to the small and medium enterprises and helps them legalise their position in the market,” said Mathew.

Business analysts said the decision to cut fine would help cash crunch companies that are at default to regularise and streamline their businesses by paying off pending dues at a reduced rate. It will be a boon particularly for SMEs in the current scenario of reduced credit lines.