Government measures in key jurisdictions 5th edition - Flipbook - Page 148
United Arab Emirates
Dipali Maldonado | d.maldonado@tamimi.com | +971 (0) 43641641
Contributor: Al Tamimi & Co
Loans and
financial
support
Has the
government put
in place any new
bank funding
schemes?
UAE Central Bank
The UAE Central Bank issued standards for its Targeted Economic Support Scheme (TESS)
with a focus on private sector companies, SMEs and individuals. In summary TESS targets
three principal aspects:
• Firstly, funding relief to banks where such banks can avail zero rated facility from the
Central Bank as part of the AED 50 billion stimulus package for UAE banks;
• Relaxation in capital buffers prescribed for banks thereby allowing banks to tap into a
capital conservation buffer up to 60% and in some instances up to 100%. TESS also
imposes a temporary suspension on banks on maximum distributable amount;
• Offers payment deferral of interest and principal of up to 6 months to private sector
companies, SMEs and individuals. Also a restriction on banks to charge fees and
penalties;
• The Central Bank has announced the extension of the applicability period of the key
components of TESS until 30 June 2021.
Abu Dhabi Fund for Development (ADFD)
ADFD is a multilateral agency which has pledged a COVID 19 soft loan program of AED 1
billion for industrial, healthcare and sectors completely disrupted by COVID 19. Eligibility
criterion for availing the soft loans include:
• (a) Annual revenue not less than AED 150 million;
• (b) Asset valuation no less than AED 10 million;
• (c) Audited financials for the last 3 years
• (d) Details of the financial stress on the company proposing to avail the soft loan;
• (e) Operational plan for the utilization of the soft loan and impact on its business; and
• (f) Details of Strategic growth for the next 3 years
Employment
What financial
support is the
government
providing to
businesses and
to individuals
on employment
issues?
•
Support to Businesses: No state aid, state wage subsidy and/or state payroll cofunding scheme has been introduced or launched in order to assist employers
adversely financially affected by the Covid-19 pandemic and unable to (or facing
difficulty in) paying staff wages. Businesses therefore remain solely and exclusively
liable for discharging staff wages and other labour-related benefits or entitlements.
•
Support to Individuals: No state aid and/or unemployment benefit scheme has
been introduced in order to assist employees who have lost employment due to
the effects of the Covid-19 pandemic.
However, the Ministry of Human Resources and Emiratisation (the “MOHRE”) enacted
interim legislation on 26 March 2020 mandating the continuation by employers of
contractual allowances and (if applicable) staff accommodation for its terminated staff
until the earlier of them being able to exit the country, secure alternative UAE
employment or the revocation of such interim legislation. The rationale behind such
measures is to ensure a sufficient financial safety net is in place for such staff pending
repatriation to their home countries (particularly in the light of travel restrictions and
travel embargoes still being in place in certain countries). Whilst this interim
legislation applies only to those companies falling under the direct remit of the
MOHRE (and so technically excludes the free-zones), a number of free zone
authorities have nonetheless adopted its terms either wholesale or in varied form.
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Government measures in key jurisdictions
