The Ministy of Human Resources and Emiratisation has issued the Ministerial Resolution No. 251 of 2022 regarding supporting Emirati small and medium-sized enterprises (SMEs) with new incentives.

The enterprises that will benefit from the new incentives have to be members of accredited funds/programmes that support SMEs in the UAE.

The new incentives include classifying up to five enterprises under Tier 1 category per owner, instead of two enterprises, and a five-year classification under Tier 1 category starting from the date of license issuance.

In addition, enterprises with a date of license issuance not exceeding five years may enjoy the incentives of Tier 1 category, instead of three years.

The categorisation of companies into three tiers is based on the Cabinet decision No. 18 of 2022, which explained the specifics of each tier.

His Excellency Khalil Al Khoori, Acting Undersecretary for Human Resources Affairs at the Ministry of Human Resources and Emiratisation said: “The Ministry has unveiled various initiatives in line with the vision of our wise leadership.

“Empowering the people of the UAE continues to be a top priority, as it has been since the Union’s establishment, which encourages us all to keep working hard to serve them better.

“We are proud of the UAE’s national wealth, its young men and women who are key in the efforts to diversify the economy and accelerate economic development efforts to build an active world-leading economy, enhance the nation’s economic competitiveness, and encourage innovation and entrepreneurship among its citizens.”

He added: “Empowering SMEs is a strategic priority within the nation’s continuous efforts to develop the business sector in the UAE, which has made great strides in laying the foundations for entrepreneurship and encouraging innovative start-ups and SMEs. The UAE ranked first globally in the Global Entrepreneurship Index 2022, and fifth globally in the Growth of Innovative Companies Index according to the Global Competitiveness Report issued by the World Economic Forum.”

His Excellency Al Khoori highlighted that the Ministry continues to contribute to national efforts to develop a robust and prosperous economic ecosystem, pushing the UAE to the top of competitiveness and global indicators.

Conditions

The Ministerial Resolution outlines five conditions for any SME to be classified under Tier 1 for five years. First, the business owner, or all the partners, must be Emirati(s); second, the enterprise must be a member of a government-accredited fund/programme for supporting SMEs; third, it must be managed by the owner themselves, or by an Emirati manager; fourth, the owner may not own or be a partner in another enterprise that is restricted by the Ministry and has any fines; fifth, the owner may not own more than five companies, or be a partner in, or a service agent.

Cancellation

The Resolution also stipulates several circumstances under which the SME classification under Tier 1 would be revoked and reclassified to Tier 2 or 3 depending on the criteria it meets: if the enterprise hires more than 50 employees, or fails to pay the employees’ wages, or fails to obtain a licence from the Ministry of Human Resources and Emiratisation to employ workers for others.

The SME’s classification under Tier 1 may also be revoked if employees of other facilities work for the enterprise, or if the enterprise is sold or its ownership transferred to another person without notifying the concerned fund/programme that supports SMEs or the Ministry, or if it is proven that the enterprise is managed by someone other than its owner or an Emirati manager, or in the event of any breach of the conditions for classifying an SME under Tier 1.

Definition

The enterprise is defined as a “small” if it is owned and managed by an Emirati national, a member of a government-accredited fund/programme for supporting SMEs and does not employ more than 15 people. Whereas, if it employs between 16 and 50 persons, it is defined as a “medium.”