The latest UAE visa changes and how they might impact the economy

During the course of May and June 2018, the UAE Federal Government announced a series of substantial changes to the UAE’s visa system, relaxing certain restrictions and making it easier for individuals and businesses to settle and operate in the country.

With many of the reforms set to benefit entrepreneurs and the business community directly, we look at what some of the major policy changes might mean for the UAE’s economy when they take effect in Q4 2018.

1. Visas for widows and divorcees: One of the most significant changes is that divorced and widowed expat women are now permitted to obtain a one-year visa for themselves and their dependants. Historically, women sponsored by their husbands have had to leave the country following a divorce, while widows have been permitted to see out any remaining time on their residency visa before leaving.

From a social viewpoint, the changes represent a recognition of the difficulties that dramatic changes in life circumstances can bring, and the new visas will allow for the continuation of a child’s education without immediate disruption. What this change means is that divorced or widowed women could enjoy more freedom to take up employment or start a new venture more easily. Women who have been thinking of setting up a new venture in the UAE but whose residency and right to work has previously been dependent on their husbands’ sponsorship are now granted a year’s visa in their own right to assess their career options and financial situation and potentially modify their visa status (see point #7 below) rather than being left in a legal limbo.

The result: There’s more talent in the local pool for UAE companies to recruit, and any potential entrepreneurs among them have the understanding and support of the government, and are therefore more likely to set up in the UAE rather than elsewhere.

What this change means is that divorced or widowed women could enjoy more freedom to take up employment or start a new venture more easily.

2. Ten-year visas for qualifying professions, investors and entrepreneurs: The government announced its decision to grant long-term visas for up to ten years for investors, scientists, doctors, engineers, entrepreneurs and innovators, adding that the UAE has always welcomed innovators and business leaders. These changes reinforce what was already a very clear message: that the UAE is open for business and keen to attract foreign investors, entrepreneurs and the next generation of talent.

Long-term visas will provide stability and confidence, and as a result would-be expat entrepreneurs and skilled professionals are more likely to look upon the UAE as a long-term proposition, thus strengthening the UAE’s position as a global hub for innovation as well as strengthening the real estate market. As for the business environment and wider economy as a whole, the changes can only be good news: attracting a wider pool of talent to settle here long term will make it easier for startups and established companies to recruit. They will help drive economic competitiveness through additional stability and encourage more expats to plough their income back into the UAE economy, thus cutting down on foreign remittances.

Entrepreneurs

3. Ten-year visas for dependants: In addition, the proposed ten-year visas for certain professions will also be available to their dependants, making the UAE more family-friendly and underlining the importance of the family unit within UAE culture, in line with its UAE Vision 2021, which states that ‘cohesive and prosperous families will form the cornerstones of society’. For entrepreneurs and professionals considering the UAE, this is a major draw.

But with a deft eye on the future, the government is perhaps hoping that the many dependants that will move to the UAE as a result of these changes may be persuaded both to study here and to join the growing talent pool in science, technology, engineering and entrepreneurship that the UAE will need to cement its status as a global hub for innovation in those crucial areas. Indeed as His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai said, ‘the new visa system will increase the chances of attracting investors and competencies to the UAE, and thus increase the country’s economic competitiveness globally.’

4. Five-year and ten-years visas for students: The cabinet also agreed visa changes for students, allowing 5-year residency visas for all students studying in the UAE, and ten-year visas for what it called ‘exceptional students’. This would allow students to complete three and four-year degrees in just one visa process, removing the headache and cost of renewing each year. All this adds up to a concerted effort not just to attract today’s innovators and professional talent, but to attract the next generation of high achievers and persuade them to view the UAE as a long-term proposition. Middlesex University in Dubai predicts their intake will rise by at least 10% in the first year, a combination, it says, of more students from overseas and young expats deciding to pursue degrees in the UAE. This move will provide an immediate boost to businesses in the UAE, giving companies immediate access to fresh graduates with time left on their visas without the complex and expensive process of hiring from an international pool.

The cabinet also agreed visa changes for students, allowing 5-year residency visas for all students studying in the UAE, and ten-year visas for what it called ‘exceptional students’.

5. New E-channel system: The E-channel system was introduced in 2017 in order to cut down visa admin time and expense both for individuals and businesses. It allows the whole process of applying and paying for entry permits and visas for employees and dependants to be done through a single online portal without the time and expense of in-person applications, and is designed to be completed within 10 minutes.

And it’s a bit of a game-changer: by the end of this year, the government expects that the number of people having to visit government centres to process applications will have dropped by a staggering 80%, meaning that the workload for government departments drops dramatically, which in turn will allow for a more efficient service in dealing with more complex issues. It’s true, there were some teething problems to begin with that have mostly now been ironed out: in certain instances, people were hit with duplicate payments when the interemirate system was slow to update. If you paid for an overstay in Fujairah, for example, and the travel date was too soon after the payment date, Dubai immigration weren’t always able to see the update. Now working smoothly, though, it’s not just a visionary world-class facility for citizens and residents but, will further enhance the UAE’s image as a business and tourist-friendly country.

6. Tourist transit visas: The cabinet has also decided to exempt transit passengers from any transit fees for the first 48 hours, with a provision to extend that to 96 hours for a nominal fee of AED 50 in a bid to turn transit time into tourism. In addition, passport-control halls across all UAE airports will offer a number of express counters to make the transaction much more user-friendly for tourists wishing to stop off in the country en route to their final destination. Making the UAE a more welcoming place to foreign visitors is not only good for the country’s image but is likely to boost short-stay tourism, bringing with it a host of benefits for UAE businesses, especially in the tourism, hospitality and retail sectors. And it makes sense to tap into that massive potential: Dubai’s International Airport alone sees around 50 million transit passengers per year, but as things stand, estimates suggest that 46 million of those never leave the terminal.

Tourists

7. In-country status change and overstayers: We already have experience of the in-country status change here – being able to transfer from a tourist visa over to a residency visa – but other visa transfers are now permitted without the need for applicants to leave the country, and individuals who have overstayed their visas can leave voluntarily, so long as they have proof they paid for their own flight, without getting a restrictive ‘no-entry’ stamp on their passport as they exit. The result? The leniency will mean more people are likely to return to the UAE to work or set up businesses.

8. 6-month visas for jobseekers: This allows jobseekers a temporary six-month visa without fees, either as an extension available to overstayers, or for people between jobs, and as the government notes, ‘the temporary visa enhances the UAE’s position as a land of opportunities and a destination for talents and professionals’. UAE companies will therefore be able to attract the best talent by hiring ‘locally’ from a pool of jobseekers with visas, without having to offer expensive expat packages with benefits such as relocation allowances.

UAE companies will therefore be able to attract the best talent by hiring ‘locally’ from a pool of jobseekers with visas, without having to offer expensive expat packages with benefits such as relocation allowances.

9. Dubai’s labour deposit or ‘bank guarantee’ is soon to be waived in exchange for an easier-on-the-pocket AED 60 insurance fee. This has been welcomed with open arms by Dubai based employers whom previously had to deposit this per employee, tying up much needed business cash flow. The deposits currently held by the Dubai Government are expected to be released back to employers providing over AED 14 billion back in to the economy.

Reforms for the better

The good news is that the government seems genuinely interested in making life easier for employers, entrepreneurs and residents alike, and in improving the country’s systems accordingly. All in all, these changes can only be of benefit to the UAE’s residents, businesses, economy and long-term future. And with the foresight they demonstrate, the UAE’s economic competitiveness and quality of life have received a huge boost that is likely to cement the country’s future as a global hub for entrepreneurship and innovation for generations to come.

Setting up your own business has never been easier. Virtuzone takes care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones, please call us on +971 4 457 8200, send an email to info@vz.ae, or click here.

About the author: Neil Petch, Chairman at Virtugroup
About the author: Neil Petch, Chairman at Virtugroup

With a history of business successes, Neil Petch is well known in the UAE and beyond as a visionary entrepreneur with a passion for helping others establish and grow their own businesses. Neil founded Virtuzone in 2009 and quickly established it as the region’s leading company formation expert, before launching Virtugroup, a holding company that has a wider mandate of supporting startups from establishment; to successful market entry; and all the way through to exit.