Covid: Freeze on Dubai Govt fees extended till 2023
Government fees will not be hiked, nor will new fees be introduced.
A freeze on government service fees in place in Dubai has been extended till 2023. Apart from the extension of the freeze, no new fees will be imposed, except when introducing “new vital services”.
The three-year freeze announced in March 2018 will continue to be in place. The decision will help ensure economic and social stability as the world reels under the impact of Covid-19.
The move is in line with the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, issued the decision on Tuesday to strengthen the Emirate’s competitiveness, attract entrepreneurs and investors, and keep pace with market trends.
The Crown Prince said the move helps raise the resilience of Dubai’s businesses and eases any financial challenges they may have due to the prevailing situation.
The decision also demonstrates Dubai government’s flexibility and agility in dealing with a “shifting global socio-economic landscape”.
The move complements the five economic stimulus packages launched by the Dubai Government since March 2020 with the aim of helping businesses tide over the repercussions of the pandemic.
The wide-ranging support measures worth Dh7.1 billion ensured that the short-term impact of Covid-19 did not translate into long-term economic challenges.
Oman to offer investors long-term residency; cut income tax on SMEs
Oman is one of the Gulf’s weakest economies and was hit hard by the coronavirus pandemic and low oil prices.
Oman will reduce income tax for small and medium businesses for 2020 and 2021 and will offer long-term residency permits for foreign investors, state TV said on Tuesday.
The plans announced on state media are part of Oman’s Vision 2040 aimed at diversifying the economy away from oil, which makes up the bulk of state revenues.
Oman is one of the Gulf’s weakest economies and was hit hard by the coronavirus pandemic and low oil prices. The International Monetary Fund said last month its economy likely shrank 6.4 per cent in 2020 and estimated it would make a modest recovery to 1.8 per cent growth this year.
The measures also include income tax being reduced for companies in sectors aimed at economic diversification that will begin operating this year.
Oman will also cut rent at the Duqm Special Economic Zone and industrial areas until the end of 2022.
It said granting longer residencies for foreign investors would be done “in accordance with specific controls and conditions that will be announced later after their study is completed by the Council of Ministers, in addition to incentives related to the market.”
The cabinet also approved a long-term urban growth strategy that “is considered a key enabler for achieving Oman Vision 2040,” state TV said citing Oman’s ruler, Sultan Haitham bin Tariq Al Said.
DMCC records 5-year high new company registrations
Creates new record for Dubai business hub in the past five years.
DMCC, a leading free zone hub for commodities trade, said on Monday that it recorded the highest number of new company registrations in five years in 2020 despite the impact of the pandemic.
The free zone said the retention rate also remained at an all-time high, primarily due to the “business support package” launched in March 2020 that positively impacted companies in 149 countries. More than 8,000 member companies availed over 13,000 offers and incentives throughout the year, DMCC said in a statement.
Ahmed bin Sulayem, executive chairman and CEO, DMCC, said despite the difficult context, the free zone continued to attract, facilitate and promote global trade flows to and through Dubai. “We surpassed 18,000 member companies, broke company registration records, while launching new initiatives and progressing on time with flagship projects. Building on this momentum, we will maximise the progress made to reach new heights in 2021.”
In 2020, rough diamonds worth Dh91.8 billion were traded through the Dubai Diamond Exchange (DDE), the world’s largest diamond tender facility in the zone. The zone’s Coffee Centre recorded seven million kilos of coffee while its Tea Centre saw the transaction of 40,000 metric tonnes of tea.
DMCC was also instrumental in drawing foreign direct investment to Dubai by marking a 20 per cent year-on-year increase in Chinese companies joining the DMCC. A China Service Centre opened its doors in Almas Tower with Mandarin onboarding support while a representative office in Shenzhen was inaugurated all with the aim of promoting the ease of doing business through the business hub.
Following an MOU with the Israel Diamond Exchange, DMCC inaugurated its representative office in Ramat Gan, Tel Aviv, Israel in 2020. The new office is supporting Israeli businesses, from all industries and sectors, to set up an office in DMCC, it said.
Dubai Gold and Commodities Exchange (DGCX), a derivatives exchange and a subsidiary of DMCC, traded 12.73 million contracts valued at Dh1.177 trillion while the DMCC Tradeflow platform recorded transactions valued at Dh744 billion, an increase of 121 per cent year-on-year. The transaction value of Islamic products rose by 128 per cent year-on-year.
Strict adherence to ESR requirements necessary, experts say
Companies across the UAE need to be up to date and comply with the UAE’s economic substance regulations (ESR) unless they want to incur heavy fines for their failure to comply, experts have said.
In a recent webinar organised by the Dubai Chamber, in collaboration with Al Tamimi & Company, experts highlighted the latest developments and provided guidance with respect to the economic substance regime and compliance requirements. The webinar, titled ‘Key Aspects of Economic Substance Regulations’, noted that the UAE has issued the Economic Substance Regulations in April 2019 and followed them with an updated guidance on relevant activities by the Ministry of Finance to help businesses to demonstrate economic presence in the UAE.
The UAE adopted new economic substance regulations in Cabinet Resolution No. 31 of 2019. These regulations provide that a company engaged in one of a number of specified sectors must have sufficient economic substance in the territory to access the territory’s tax regime. The changes were in response to pressure from the EU on a number of territories, following recommendations from its EU Code of Conduct Group, and apply for financial years starting on or after January 1, 2019. The key activities identified by the European Commission Code of Conduct Group are: banking, insurance, fund management, financing and leasing, shipping, intellectual property, collective investment vehicles, and holding companies that generate income from any of these key activities.
Shiraz Khan, head of Taxation at Al Tamimi & Company, said that tax is a key revenue generation for many countries that don’t have an abundance of natural resources. “These countries generally rely on taxes to fund their public expenditure.”
One of the biggest concerns during the 2008 downturn, he said, revolved around tax evasion. “Many international companies around the world, with the advent of globalisation, were essentially operating in multiple countries and moving money from high tax jurisdictions into low tax jurisdictions and therefore paying less tax as a result.”
The UAE Ministry of Finance (MoF) in August 2020 announced the details of the Cabinet Resolution No. (57) of 2020 concerning Economic Substance Regulations. The Resolution was issued in consultation with the Organisation for Economic Cooperation and Development (OECD) and the European Union Code of Conduct Group, in order to direct companies that engage in one or more relevant activities. The resolution amended and repealed the Cabinet of Ministers Resolution No. (31) of 2019 concerning Economic Substance. Under the resolution, the UAE Federal Tax Authority (FTA) was appointed as the National Assessing Authority for the purposes of the UAE Economic Substance Regulations.
According to the resolution, the definition of a Licensee was amended to be limited to juridical persons and unincorporated partnerships that are registered (whether by way of commercial/trade license or other form of permit) to carry out a Relevant Activity. Natural persons, sole proprietorships and other business forms that are not juridical entities are no longer within the scope of the UAE economic substance regulations.
Noff Al-Khafaji, senior associate, Corporate Structuring at Al Tamimi & Company, noted that the UAE Ministry of Finance, in May 2020, issued a Covid-19 advisory extending the notification filing deadline and consideration of the impact of the pandemic on businesses. In January 2021, the MoF announced that the December 31, 2020 filing deadline for ESR notification and report (if applicable) was extended to January 31, 2020. Failure to provide notification and any relevant information or documentation will result in a Dh20,000 fine, she said. Also, providing inaccurate information will result in a Dh50,000 fine. Failure to submit an ES report can result in a fine of Dh50,000 in the first year, and a fine of Dh400,000 in the second consecutive year of failure.