The UAE has announced further changes to its assistance program for the Small and Medium Enterprise (SME) sector. This includes changes to the classification and duration of eligibility to receive incentives.
Under the new classification structure, announced by the Ministry of Human Resources and Emiratisation, up to five enterprises will now be included under Tier 1 category per owner, instead of two enterprises earlier.
Besides, enterprises with a date of license issuance not exceeding five years may enjoy the incentives of the Tier 1 category, instead of the existing three-year limit.
The categorization of companies into three tiers is based on Cabinet decision No. 18 of 2022.
Enterprises are defined as ‘small’ they are owned and managed by an Emirati national, a member of a government-accredited fund or program for supporting SMEs, and do not employ more than 15 people.
Enterprises that employ16 to 50 persons are defined as ‘medium’ ones.
The enterprises that will benefit from the new incentives have to be members of accredited funds or programs that support SMEs in the UAE.
The ministerial resolution also outlined certain conditions for SMEs to be classified under Tier 1 for five years, such as the business owner or all the partners should be Emirati and the owner may not own or be a partner in more than five companies.
The resolution also stipulates conditions such as if enterprises hire more than 50 employees or fail to pay the employees’ wages under which the SME classification under Tier 1 would be revoked and reclassified to Tier 2 or 3.
According to the World Economic Forum’s Global Competitiveness Report, the UAE ranked first in the world in the 2022 Global Entrepreneurship Index and fifth in the world in the Innovative Business Growth Index.
