Federal Law No. 2 of 2014 on Small and Medium Enterprises (SMEs) (economy and business law)

Article (1)  
Definitions  
In the application of the provisions of this Law, the following words and expressions shall 
have the meanings shown opposite each of them respectively unless the context requires 
otherwise:  
(the) UAE  : The United Arab Emirates  
(the) Ministry  : The Ministry of Economy  
(the) Minister  : The Minister of Economy   
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 (the) Concerned 
Authoritie  : The local authority or entity in charge of application of the 
provisions of this Law  
Enterprises and 
Establishments  : Any sole company or establishment exercising an economic 
activity whether that company or establishment is small, 
including micro companies and establishments, or medium  
(the) Council  : The Small and Medium Enterprises and Establishments (SMEs) 
Council  
(the) Programme  : The National Programme of the Small and Medium Enterprises 
and Establishments

Article (2)  
Law Objectives  
This Law aim at achieving the following:  
1. Development of small and medium enterprises and establishments so that they can be a 
fundamental support of the economic development in the UAE.  
2. Dissemination and encouragement of the culture of research, creativity, innovation and 
entrepreneurship of businesses, which achieves the economic aspirations of the UAE.  
3. Coordination of the efforts of the Concerned Authorities for the purpose of development 
of enterprises and establishments.  
4. Promotion of the competitiveness of small and medium enterprises and establishments 
for the purpose of providing employment opportunities in favour of the national 
economy.  
5. Development of the programmes and initiatives targeting the development of 
enterprises and establishments.  
6. Motivation and support of citizens to penetrate the labour market in the field of enterprises and establishments and contributing to the UAE's gross domestic product 
(GDP).  
7. Promoting and fostering the UAE's position as a hub for entrepreneurship and 
construction and creation of enterprises and establishments.   
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Article (3) 
Enterprises Classification  
1. For the purposes of this Law, the enterprises and establishments are classified by the 
SMEs Council based on two or more major criteria of the following:  
a. Employment size.  
b. Size of annual returns.  
c. Capital.  
2. Based on the recommendations of the SMEs Council, the Council of Ministers may add 
any other appropriate criterion to those listed in item (1) of this Article, given the nature 
and type of the economic activities exercised by the enterprises and Establishments.

Article (4)  
Unified Definition of SMEs  
The Council of Ministers shall issue a resolution promulgating the unified definition of SMEs, subject to the recommendations of the SMEs Council and following consultations 
with the Concerned Authorities.

Article (5)  
Small and Medium Enterprises (SME) Council 
The Council of Ministers shall issue a resolution promulgating establishment of a council to 
be named the SMEs Council and shall be under the Ministry of Economy. It shall be chaired 
by the Minister, with the membership of representatives from relevant public and private 
sectors authorities. The said resolution shall determine the SMEs Council's operation 
regulations and decision making mechanism.

Article (6)  
Competences of the Council  
The SMEs Council shall undertake the following mandates:   
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 1. Creation and development of the policies and strategic plans towards the development 
of enterprises and establishments.  
2. Developing the rules and regulations required for coordination between the Programme and the Concerned Authorities.  
3. Monitoring the performance indicators of the Programme and approving its annual 
report on the SMEs.  
4. Conducting periodical review of the effectiveness of the SMEs classification criteria and 
proposing the appropriate amendments and submitting the same to the Council of 
Ministers.  
5. Setting up the conditions and criteria for the Programme's membership.  
6. Any other relevant tasks to be assigned to it by the Council of Ministers.

Article (7)  
The National Programme of Enterprises and Establishments  
There shall be created in the Ministry of Economy a Programme by the name of the "National Programme for Small and Medium Enterprises (SMEs)" pursuant to a resolution to 
be issued by the Council of Ministers.

Article (8)  
The Programme Terms of Reference  
The mandates of the Programme shall be as follows  
1. Coordinating with the Concerned Authorities in drawing up the general guidelines 
regarding the provision of technical, administrative, and training expertise and 
assistance in the various fields for the purpose of supporting and developing enterprises and establishments.  
2. Preparing a periodic assessment report on the enterprises and establishments with the challenges faced and the appropriate solutions for such challenges and submitting that report to the SMEs Council.  
3. Coordination with the Federal and local government entities and the private sector for  
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 marketing the enterprises and establishments products inside the UAE and abroad.  
4. Coordination with the Concerned Authorities for the purpose of providing advantages 
and incentives for the enterprises and establishments.  
5. Coordination with the relevant regional and international organisations for support of 
the development of the enterprises and establishments sector.  
6. Development of awareness raising programmes to encourage creation of the enterprises and establishments together with introducing the investment opportunities that are available and appropriate for the enterprises and establishments and their risks as well 
as introducing local and international exhibitions and assisting in taking part in the 
same.  
7. Creation and categorization of a database of the registered enterprises and establishments.  
8. Encouragement of self -employment, joint cooperation and merger between enterprises 
and establishments.  
9. Approval of the applications for granting concessions to the enterprises and 
establishments that are members of the Programme such as the local funds, institutions, 
programmes and entities.  
10. Any other related tasks to be determined by the SMEs Council.

Article (9)  
Registration of Enterprises and Establishments in the Programme  
The Programme shall, in cooperation with the Concerned Authorities, register the 
enterprises and establishments wishing to join the Programme subject to satisfaction of the 
conditions and criteria to be set out by the SMEs Council, on condition the registration data 
shall be periodically communicated to the SMEs Council.

Article (10)  
Facilities and Incentives  
Owners of enterprises and establishments enjoying membership of the Programme shall  
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 avail from facilities and incentives extended by the public and private sectors, as follows:  
1. Credit facilities and promotion and marketing facilities provided by the private sector, on 
condition these facilities shall not be in conflict with any financial or legal obligations.  
2. Commitment on the part of the Federal entities to contracting with the enterprises and 
establishments in the UAE at a ratio no less than 10% of the total contracts prices in 
order to meet their purchase, service and consultation needs.  
3. Commitment of companies where the Federal Government owns no less than 25% of 
their respective capital to contracting with the enterprises and establishments in the UAE 
with a ratio no less than 5% of the total contracts prices in order to meet their purchase, 
service and consultation needs.  
4. Streamlining of the procedures, reducing the fees of licensing and utilization of land for industrial or agricultural purposes by owners of enterprises and establishments, in 
accordance with the applicable legislations and in coordination with the Concerned 
Authorities.  
5. Allocation of appropriate space in the exhibitions the UAE participates in abroad, to 
showcase the national products contributed by the enterprises and establishments 
owners, and providing any necessary information on the external markets in accordance 
with the regulations to be prescribed by the Executive Regulations of this Law.  
6. Setting up local, specialised exhibitions or participating in other domestic exhibitions for 
promotion and marketing of the enterprises and establishments products.  
7. Enterprises and establishments may, due to their production purposes, be exempted from customs tax on equipment, raw materials and intermediate goods, subject to a 
resolution to be issued by the Council of Ministers and the competent authorities in the 
Emirates that are members to the Federation, each in their respective areas of competency, and subject to a recommendation by the Minister of Economy.  
8. Enterprises and establishments shall be exempted from the clause of providing a bank 
guarantee in respect of the workers they employ, on condition the Council shall, in 
coordination with the Ministry of Labour, set the regulations and conditions required for 
the said exemption.   
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Article (11) 
The sub -clauses (4), (7) and (8) of the preceding article shall be availed from within the three 
years following the Programme membership. The Programme may extend the term of 
availing from the same for one year, renewable for other similar term or terms.

Article (12)  
Additional Facilities  
Subject to the stipulations of intellectual property laws, the Executive Regulations of this 
Law shall specify the Additional Facilities to be granted to:  
1. The enterprises and establishments that have specific departments for research and development (R & D) and innovations which have achieved economic success.  
2. The inventors and patentees in the UAE.

Article (13)  
Combining Facilities and Incentives  
Enterprises and establishments owned by UAE citizens may combine facilities and incentives 
provided by both Federal and local entities and by the private sector.

Article (14)  
Facilities and Incentives Requirements  
For enterprises and establishments to avail from the facilities and incentives they shall 
satisfy the following:  
1. They should be fully owned by UAE citizens.  
2. They should be members of the Programme.

Article (15)  
Enterprises and Establishments Obligations  
The enterprises and establishments shall comply with the following:   
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 1. Applying the facilities and incentives to their specified purpose.  
2. The enterprise and establishment may neither be changed nor their title may be 
transferred to another person or entity without the approval of the Concerned Authority.  
3. Transparency and disclosure to the Concerned Authorities.

Article (16) Establishment Insurance  
Owners of enterprises and establishments who wish to receive facilities and incentives shall 
insure their enterprises and establishments with an approved insurance company in the 
UAE, dependent upon the types of required insurance as specified by the Executive 
Regulations of this Law.

Article (17)  
Mechanism of Providing Credit Facilities and Financing of Enterprises and 
Establishments Activities  
1. The Emirates Development Bank shall, in cooperation with the SMEs Council, set the mechanism of providing credit facilities and financing of enterprises and establishments 
joining the Programme.  
2. The Emirates Development Bank shall commit that the credit facilities and financing it provides to the small and medium enterprises and establishments joining the 
Programme shall not be less than 10% of the total annual credit facilities and financing 
the Bank extends.

Article (18)  
Procedural and Technical Criteria for Obtaining Loans 
The UAE Central Bank shall issue the procedural and technical criteria for granting 
commercial loans to the owners of enterprises and establishments.  
  
  
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Article (19)  
Annual Assessment of Enterprises and Establishments Environment  
The Concerned Authorities shall conduct an annual assessment that seeks to ensure the 
existence of a supportive and encouraging environment for the enterprises and 
establishments, through the development of services and facilitation of transactions 
performance in a fast and effective manner, which would help realize competitiveness in the 
UAE. A report on the assessment findings shall be submitted to the SMEs Council.

Article (20)  
The Ministry Representation of the Enterprises and Establishments  
The Ministry of Economy shall, in coordination with the Concerned Authorities, represent the enterprises and establishments towards the other States and in the global and regional 
organisations

Article (21)  
Fees Exemption  
Subject to a resolution of the Council of Ministers, the Federal fees from which the 
enterprises and establishments shall be exempted, together with the term of such 
exemption, shall be fixed.

Article (22)  
Penalties  
Without prejudice to any severer penalty stipulated by any other law, any owner of an 
enterprise or establishment who breaches any provision of article (15) of this Law, shall be 
punishable by a fine no less than AED five thousand (AED 5,000), and no more than AED 
five hundred thousand (AED 500,000).  
 
  
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Article (23) Final Provisions  
The Council of Ministers shall, based on the submissions by the Minister of Economy, issue 
the Executive Regulations of this Law within three months as of the date this Law having 
become operative.

Article (24)  
Any provision that violates or contradicts the provisions of this Law shall be null and void.

Article (25)  
This Law shall be published in the Official Gazette and shall come into force three months 
following the date of publishing thereof.  
  
 
Khalifa bin Zayed Al Nahyan  
President of the United Arab Emirates,  
 
Issued by us in Abu Dhabi:  
Dated: 3 Jumad Awal 1435 AH,  
Corresponding to 4 March 2014 AD