Out-Law Guide 2 min. read
27 Apr 2020, 4:57 pm
Gulf Cooperation Council (GCC) states have taken a number of rapid and significant actions at a government and banking level in order to support people and businesses which are suffering financially from the impact of the Covid-19 pandemic.
Each state has invested in a significant financial stimulus package, as well as various exemptions, suspensions and subsidies designed to support businesses and individuals to keep afloat, mitigate the impact and attempt to emerge from the other end of the crisis on semi-solid ground. The GCC states have also adopted various 'social distancing' and 'lock down' protocols in order to curtail the spread of the virus itself.
United Arab Emirates (UAE): as of 5 April, the UAE doubled the size of its stimulus package from AED 126.5 billion (US$34bn) since 22 March to currently AED 256 billion (US$69.7bn) and allowed banks and finance companies in the country to extend deferrals of principal and interest payment to their customers until 31 December 2020.
Dubai Free Zones Council, representing the emirate's 'free zones', announced an additional economic stimulus package to complement that of the UAE on 28 March. The package includes a six month postponement on rent payments, allowing payment by instalments, refunding security deposits and guarantees, cancelling fines for both companies and individuals, and permitting temporary contracts allowing the free movement of labour between companies operating in the free zones for the rest of 2020.
Kingdom of Saudi Arabia (KSA): similarly, KSA topped up its stimulus package by SAR 70bn (US$18.6bn) on 20 March, resulting in a combined package of SAR 120bn.
Bahrain implemented a stimulus package of BHD 4.3bn (US $11.4bn) on 17 March.
Qatar implemented a stimulus package of QAR 85bn (US $23.35bn) on 16 March, made up of QAR 75bn for the private sector and an additional QAR 10bn boost into the capital markets in the Qatar Stock Exchange.
Oman: in addition to the banking only stimulus package of OMR 8bn (US$20.8bn) announced by the Oman Central Bank on 18 March, the Oman Covid-19 Supreme Committee announced a range of incentives to support private sectors firms and workers on 15 April, although the financial value of such measures has not yet been confirmed.
Kuwait has not formally announced the total value of any financial stimulus package. However, the Central Bank has indicated its intention to support the commercial banking system through the crisis. The state has also announced a KWD 500 million (US$1.6bn) increase to the 2020-21 ministries and government budget.
Within each stimulus package, GCC states have introduced a variety of exemptions, suspensions and subsidies in order to provide practical support to people and businesses across the region. The most common of these include:
These initiatives will last for an initial fixed period of three months or six months. Some are specific to particular categories of individuals or businesses which are at a higher risk of the negative financial impacts of Covid-19 such as small businesses; private sector; retail; tourism and transportation businesses, etc.
Aside from the reliefs introduced by the GCC states’ governments there are further tax planning and mitigation steps that in-house tax and finance leads in the region can take in order to support their business during these challenging times.
02 Apr 2020
26 Mar 2020