Top 5 new laws for SMEs and startups in UAE
UAE was ranked 26th globally and 3rd in the MENA region in 2018 as per the Global Entrepreneurship Index. It remains one of the most favored destinations for startup investments. Strong government support for innovation, creativity, and entrepreneurship are the factors behind driving force of growing SME startups in UAE. Strongly backed by advanced infrastructure, business-friendly environment, political and economic stability, and cosmopolitan lifestyle, startups in UAE receive the best resources for laying the foundation. Majority of startups are mainly in, trading, e-commerce, marketplaces, real estate, infrastructure, it, software as a service etc. The government in UAE is pro startups and hence the government keeps on amending the laws from time to time. Recently, top 5 new laws for SMEs and startups in UAE, theses laws directly associate with SMEs & startup which simplify and reduce the cost of setting up business in Dubai.
1. Govt. to pay private sector its Dues in 30 Days instead of 90 days
SMEs that supply services and goods to government agencies would get their payment in 30 days instead of 90 days, provided that the payment period is only within 10 days for the members of Dubai SME. The government has set a classification of the SMEs entitled to receive their dues within 30 days. The initiative is expected to provide SMEs with additional liquidity of AED 1.6 BN annually.
2. The value of primary insurance for SMEs will be reduced
The value of primary insurance for SMEs will be reduced to the range of 1 to 3 per cent instead of 2 to 5 per cent, in order to encourage them to continue supplying to government agencies. The minimum primary insurance has been cut from AED 40 millions AED 20 Millions – covering 80 per cent of SMEs – while the maximum primary insurance has reduced from AED 100 Millions to AED 60 Millions.
3. Rate cut in performance insurance
The final insurance rate “performance insurance”, has been cut from 10 per cent to 5 per cent on all supplies. Dubai has classified list of SMEs entitled to the performance insurance reduction. This would increase the value of the retrieved final insurance.
4. Government Capital Projects
5% of government capital projects to be allocated to SMEs. This move is to encourage SME startups in UAE to grow their business, enter into major projects contracts with government agencies and form alliances to compete for government projects.
5. Projects of AED 1 Billion allocated to public-private partnerships
This announcement is to attract the private sector investments, provide confidence to SME startups in Dubai and raise the government service quality. It will also ensure the implementation of projects planned by government agencies is on time, which will be in line with the Dubai 2021 Plan.
Boosting the contribution of SME startups in UAE is one of the core focuses of the UAE’s national growth strategy. In Dubai, only 0.8 percent of enterprises are registered as large businesses, which means the majority of the private sector are made up of small & medium-sized enterprises. Of the entire workforce employed in Dubai, 52.4% are in SMEs and it contributes 47% to the GDP of Dubai, according to latest data from Dubai SME website. The newly introduced laws will definitely make it even more easier for SME startups in UAE to establish and take advantage of unique business opportunities of Dubai market.
This blog post is written by Ms. Divya, Senior Business Advisor at >Flyingcolour business setup, accounting & tax services in Dubai and across UAE. Feel free to call today for a more detail on business setup advisory. Please send inquiry to info[at]flyingcolour[dot]com or call +971 4 4542366.
