As part of the wider economic stimulus initiatives announced by the Dubai free zones council, the Dubai International Financial Centre (“DIFC”) Authority has announced its “business stimulus initiative” to assist companies with the financial challenges posed by the COVID-19 global outbreak. This DIFC initiative aims to assist both new and established businesses in the DIFC to manage their costs and cash flow over the next three months (April-June). We anticipate further initiatives to be announced by the Dubai Financial Services Authority (DFSA), the financial services regulator in the DIFC, in the coming weeks and will continue to provide updates as further announcements are made.
This update sets out the key aspects of the initiative and who will benefit from them.
All DIFC incorporated entities
Deferred payment on all leases:
You can defer the payments due for commercial leases for up to 6 months. To be eligible the lease must be signed with DIFC Investments Ltd and relate to a DIFC owned asset located in The Gate Building, Gate District Building 2 to 5 and Gate Village Buildings 1-11 or Gate Avenue.
Reduction of fees for property registration from 5% to 4% for three months:
This reduction is applicable to all properties within the DIFC. Reduction on freehold transfer fees from 5% to 4% for any sale or purchase of property taking place within the next 3 months and registered with DIFC Registrar of Properties within 30 days after expiry of the three-month period which is 30th June.
Free Movement of Labour:
Movement to other free zones is allowed on condition that employers have secondment arrangements in place with employees. This arrangement must be recorded with registry services to obtain a secondment card.
Proposed new DIFC entities
Full waiver of Incorporation/Registration and Licensing fees for new entities:
This initiative applies to all entities that submit an application for Incorporation/Registration during the period from 1st April 2020 to 30th June 2020. This applies regardless of the type of entity e.g. retail, financial, FinTech, regulated and non-regulated, all are included. The waiver applies to the Incorporation/Registration fee of USD 8,000 and the Licensing fee of USD 12,000. However, firms will still be required to pay the relevant fees for Data Protection, Registrar of Real Property in case of Lease Registration as well as any DFSA fees (if applicable). If you have already paid your Incorporation/Registration and Licensing fees but your entity is not yet fully Incorporated/Registered you are entitled to apply for the 10% discount on your Licensing fee as set out below.
Current DIFC entities
10% Discount on Licence renewal for existing entities:
Discount is offered on the total Licence renewal fee for all DIFC Incorporated/Registered entities that are due for renewal between 1st April 2020 to 30th June 2020. The discount excludes Data Protection Fees and DFSA Fees (if applicable). If your lease is up for renewal in July, you can still benefit from this discount if you make the payment before 30th June as leases can be renewed up to 30 days before they expire.
In setting out these initiatives the DIFC acknowledges its strategic economic role and its social responsibility to support firms in these exceptional circumstances. As part of the DIFC community CCL will continue to provide support and expertise to new applicants and existing firms to help them understand the evolving economic and regulatory landscape and will provide further updates for any relevant initiatives that are announced.
If you have any questions regarding this update, or if you are looking for guidance on doing business in the DIFC, contact our consultancy team.