In the UAE, a new law grants SMEs exemptions from customs tax for equipment, raw materials and goods for production purposes. It also exempts SMEs from the payment of bank guarantees that companies must pay per new worker. The goals of the legislation are to help raise the contribution of SMEs to the country’s economic output.
Sultan Al Mansouri, the Minister of Economy, explained “my hope is that the contribution of small and medium-sized enterprises to [non-oil] GDP will jump from 60 per cent to 70 per cent by 2020,”
Federal authorities and ministries must contract at least 10 per cent of their procurement budget for purchasing, servicing and consulting to SMEs. The UAE has been working to bolster support for SMEs, which represent almost 92 per cent of the total number of companies and provide more than 86 per cent of private-sector jobs. The legislation was inspired by the success of similar legislation in countries such as South Korea, Singapore and Sweden.
Al Mansouri went on to explain the legislation and its goals saying “Emirati entrepreneurs falling under the small and medium classification will benefit from a number of incentives offered by the council, including credit and funding facilitation, financing, marketing and reduced licensing costs”.
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