United Arab Emirates

Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

General Information

Except for VAT and corporate tax on oil and gas companies, and branches of foreign banks, the UAE does not impose corporate tax on businesses registered onshore. However, several transparency initiatives implemented recently in the country, related to the OECD’s BEPS project, and international exchange of information, could have material impact on business operations (i.e. Economic Substance Rules).

Employment-related measures

(e.g. state compensation schemes, training…)

  • Dubai free zones have relaxed regulations around the transfer of employees between different entities to give employers an alternative to a temporary lay-off and maintain workers’ employment
  • Employers are also permitted to implement the following measures in the DIFC free zone:
  • Reduced working hours
  • Imposed vacation
  • Imposed unpaid leave
  • Temporary remuneration reduction
  • Restricted workplace access
  • Remote working requirements
  • Extended residency visas where employees are made redundant
  • In addition, the DIFC is maintaining a “DIFC available employee database” of all employee terminations since 01/03
  • Sick leave for Covid-19 has special requirements in the DIFC, and is not considered towards an employee’s sick leave balance
  • Further, Emirates Airlines announced that staff salaries will be returned to 100% from October, despite layoffs in July.

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

  • The UAE government announced USD 70 billion stimulus package, representing approximately 20% of GDP. Key highlights include:
    • The Central Bank of the UAE (CBUAE) reduced policy interest rate twice by a combined 125 basis points so far this year
    • Waiver of all payment service fees charged by the CBUAE for six months
    • Reduction in reserve requirements to 7%
    • Zero-interest-rate loans to banks (collateralized)
    • Use of excess capital buffers
    • Increase of loan-to-value ratio for first-time home buyers by 5%
    • Limits on bank fees for SMEs
    • Raising the limit on banks' exposure to the real estate sector from 20 to 30% of risk-weighted assets
    • Relaxation of the Net Stable Funding Ratio and the Advances to Stable Resources Ratio
  • Another USD 7.2 billion fiscal package included
    • Reduction in government fees
    • Acceleration of infrastructure projects
    • Water and electricity subsidies
    • Credit guarantees and liquidity support
    • Rebate on commercial lease payments in the tourism/hospitality sector.

Measures to ease the lockdown

Internal flights

  • UAE residents and tourists will be allowed to fly to Ras Al Khaimah without prior approval from 15 October
  • However, a negative Covid-19 certificate from a swab test taken no more than 96 hours before the flight to Ras Al Khaimah International Airport needs to be presented
  • Emirates Airlines continues to increase its capacity, with flights operating in over 80 destinations and an expected return to all 143 destinations by the summer of 2021

Back to school

  • Over a million students have returned to schools across the UAE with strict measures in place to control the spread of the virus
  • Pupils have opted for a blend of remote and in-class lessons: while evaluations of schools’ digital capabilities are positive (see the ‘Adapt and rethink’ section of this newsletter), the consensus among teachers and pupils is that there is no substitute for in-class learning.

Custom measures


  • The Dubai government announced several short-term measures as part of an economic stimulus package intended to aid UAE businesses navigate the potential impact of COVID- 19. 
  • As a part of the implementation of customs-related incentives in the stimulus package, Dubai Customs has confirmed: 
    • There will be a refund of 1% of the customs duty imposed on imported goods sold locally in the UAE. Goods imported between 5 March 2020 and 30 June 2020 which are liable to customs duty at the rate of 5% are eligible for the refund. 
    • There will be an exemption from the berthing fee for arrivals and departures, and direct and indirect loading fees for traditional wooden commercial vessels registered in the UAE at Dubai and Hamriyah Port between 15 March 2020 and 30 June 2020. 
    • The AED 50,000 bank or cash guarantee required to undertake customs broking activities is revoked. 
    • The bank or cash guarantee deposited by existing customs brokers and clearing companies will be refunded.

Dubai – duty refund

  • Eligibility for customs duty refund: Dubai Customs will allow a 1% customs duty refund on goods which fulfill all the following conditions:
    • liable to 5% customs duty 
    • imported into the UAE through Dubai Customs 
    • upon payment of full customs duty 
    • import declarations processed between 15 March to 30 June 2020 
    • for resale locally within the UAE 
  • Minimum refund threshold :only refunds of AED 100 or more will be processed and disbursed.
  • Import declaration types: eligible imports cleared under the following import declaration types will qualify for the refund: 
    • Import to local from Rest of the World 
    • Import to local from Free Zone 
    • Import to local from Customs Warehouse 
    • Imports entitled to customs duty drawback ineligible for refund 
    • Imports intended for Automated Transfer of Customs Duty (ATCD)/ Makasa process ineligible for refund

Other measures and sources

Distance learning evaluation for schools

  • Results of the Knowledge and Human Development Authority's (KHDA) Distance Learning Evaluation (DLE) have shown that out of 209 schools in Dubai, 67percent were offering 'developed' e-learning programs
  • Out of 173 schools in Abu Dhabi, 146 were found to offer 'developed' e-learning programs, according to the Abu Dhabi Department of Education and Knowledge (ADEK)


  • The government has launched a project entitled “Designing the Next Fifty Years Project in the UAE”.
  • The project, inaugurated on September 29 by the Prime Minister and ruler of Dubai aims to involve the community in drafting a development plan for the country
  • The new ideation platform enables contributors to enter ideas into one of sixteen ‘design fields’ such as Education, Housing and Youth including upload of a business-case document and a short description of the initiative
  • The project coincides with reports that the official government portal has witnessed a 50% increase in visitors in H1 2020 as culture in the UAE and globally moves to more online forms of participation.

Testing and inspection measures

Continuing inspections

  • Intensive field inspections continue in Dubai led by the Commercial Compliance & Consumer Protection (CCCP) department of the Department of Economic Development (DED).
  • In addition, the DED has encouraged consumers and business to report non-compliance with the precautionary guidelines and is employing technology in the form of the Dubai Consumer app to extend the reach of its compliance monitoring.
  • The latest round of field inspections has recorded 750 compliant establishments with no fines being issued.

Test requirements to fly

  • A PCR test is no longer mandatory for Dubai residents and tourists from over 50 countries when flying with Emirates Airline.
  • The key timeframe appears to be 96 hours: the test must be taken 96 hours prior to departure.
  • The airline only accepts PCR tests, not antibody or home testing kits.

Drive-through testing

  • To maximize efficiency and safety, drive through testing has become popular in Abu Dhabi.
  • Mubadala Healthcare has sponsored the building of the latest facility at Al Jazira Sports Club in support of the government’s policy of high-volume testing to minimize the spread of Covid-19.

Sniffer dogs

  • Abu Dhabi and Sharjah have joined Dubai airport in the deployment of sniffer dogs to detect the virus.
  • Experiments carried out in the UAE relied on high-speed sampling from the armpits of presumed cases.
  • Samples are then sniffed out by the dogs without coming in contact with the persons, and the results are revealed on the spot.
  • Data and studies showed that the detection of suspected Covid-19 cases achieved an accuracy rate of 92%.

Steps to adopt a new reality

New sustainability commitment

  • Dubai is studying the reduction of emissions during the Covid-19 movement restrictions, to create a baseline for future curbs on greenhouse gases.
  • On the back of its 22% reduction in emissions in 2019 and the decreases in nitrous oxide and other fumes due to the Covid-19 lockdown, the Emirate is investigating the possibility of ramping up its environment strategy.
  • The study has also helped the Dubai Electricity and Water Authority (DEWA) to reduce the need for polluting modes of transport and energy consumption and avoid a return to them in a post-Covid-19 world.

New standards in social care

  • Perhaps as a result of awareness of the impact on mental health the continued pandemic and lockdown is having on citizens globally, the Department of Community Development in Abu Dhabi has run workshops to collaboratively develop standards for licensing of social care professionals in the Emirate.
  • The government entity seeks to bring in social care services regulations for identifying those in need of social support, along with policies and standards for social care professionals and facilities.
  • Regulators, universities and (social) care providers were engaged in workshops that also encompassed entities from Dubai and Sharjah.
  • Continuing on our report on the knowledge economy in the UAE, Education sector involvement was considered especially critical to facilitate compatibility between the education and training provided and requirements of any licensing generated in the programme.

Contact us

Tax: Ashok Hariharan – ahariharan@kpmg.com
Restructuring: Bruce Matthews – bmatthews5@kpmg.com