Economic Boost: AED 1.5 Billion Incentive Package Approved

Economic support measures continue to play a pivotal role in enhancing market confidence and sustaining business activity across the Emirate of Dubai, particularly through targeted incentives for key sectors.

Underscoring this commitment to foster growth and strengthen economic resilience, Dubai has approved a second package of economic incentives valued at AED 1.5 billion.

Combined with the initial AED 1 billion package approved in March 2026, the total value of economic stimulus introduced within less than two months now reaches AED 2.5 billion, providing full-bodied support for the business community.

Notably, this second stimulus package introduces 33 targeted initiatives to be rolled out over periods ranging from three to twelve months, with detailed implementation schedules to be announced by the respective government authorities overseeing each measure.

These wide-ranging initiatives span several critical sectors, including government services and fees, education, tourism, trade and logistics, real estate, construction, arts and culture.

The private educational facilities registered with the Knowledge and Human Development Authority (KHDA) can now access specific structural relieving structures designed to ease financial pressure through a new series of support initiatives. The private educational facilities can now defer license renewal fees, utilize installment-based payment options, and benefit from the postponement of outstanding fines. Furthermore, early childhood centres will receive partial rent exemptions alongside extended rent-free periods for facilities currently under development.

To further support the education sector, the Knowledge Fund has introduced additional relief measures for its affiliated institutions, including full or partial exemptions from guarantee insurance requirements on cancelled contracts, the temporary suspension of contractual penalty clauses, a complete freeze on scheduled rent increases during lease renewals, and the option to defer upcoming rental payments.

In the business sector, the Dubai Department of Finance will reduce the final retention security for supply contracts from 10 percent to 2 percent for all companies contracted with government entities. Additionally, the contract value threshold for performance guarantee exemptions will be raised from AED 5 million to AED 10 million, significantly easing the burden on contractors. This will allow smaller, local contractors to bid on larger government or corporate projects that they previously couldn’t afford to secure.

Within the cultural sector, entities supported by the Dubai Culture and Arts Authority will receive financial relief through the deferral and installment of rents. Also, rental fees for temporary spaces hosting artistic and cultural events will be reduced.

To support hospitality and events, the Dubai Department of Economy and Tourism is introducing a comprehensive relief package for registered establishments. These measures include full exemptions from the Tourism Dirham and sales fees on hotel rooms and restaurants, alongside the elimination of permit and license fees for holiday homes. Additionally, operators will be exempted from event permit fees, as well as all cancellation and postponement charges for conferences, exhibitions, and events.

Under the new measures, Dubai Customs will allow businesses to settle outstanding import declaration fees through installments, while offering a substantial 80 percent reduction on fines for customs cases. Concurrently, the transport sector will receive targeted relief via the Roads and Transport Authority, which is deferring payments for passenger transport activities and waiving penalties related to the vehicle availability and arrival time indices.

Dubai Municipality will extend the validity of building permits for construction projects, while the Mohammed bin Rashid Housing Establishment will grant UAE nationals a one-year extension on approvals for housing construction loans. Additionally, in the civil aviation sector, entities registered with the Dubai Civil Aviation Authority will benefit from reduced renewal fees for activity permits and a temporary suspension of late-renewal penalties.

Ultimately, this comprehensive relief package reflects Dubai’s commitment to fostering a resilient and business-friendly environment. By directly targeting the operational pressures of key industries, these strategic measures ensure long-term market stability, inject vital liquidity back into the economy, and pave the way for sustainable economic growth across the Emirate.

To discuss and have more information on these regulatory changes, you may contact Essa Galadari, Partner & Deputy Head of Litigation via info@galadarilaw.com

Essa Ziad Galadari Partner & Deputy Head of Litigation essa@galadarilaw.com