Securing Wealth and Residency: The UAE Golden Visa

In 2019, amidst the global wave of investment migration, the UAE government launched a new residency program – the Golden Visa. In essence, this program grants high-net-worth individuals, skilled professionals, industry or business leaders, outstanding students, and other eligible individuals the opportunity to reside, work, and study in the UAE for extended periods without the need for sponsorship. The Golden Visa extends these privileges to their families as well. With its unique advantages, the Golden Visa has garnered significant attention and interest.

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The Golden Visa program in the UAE offers a pathway to residency for individuals meeting specific criteria, catering to a diverse range of eligible candidates. For affluent individuals, the common route to obtaining the Golden Visa is through the investor category, which requires applicants to make financial investments in the UAE to qualify.

Currently, there are two primary investment channels available: purchasing property worth 2 million dirhams within the UAE or depositing 2 million dirhams in a personal bank account for a period of two years. As a prevalent method of international investment migration, the underlying logic behind these investment options is straightforward: individuals seeking higher returns typically opt for real estate investments, while those prioritizing low-risk and stable assets with strong value propositions choose bank deposits.

In the current global economic landscape, characterized by post-pandemic recovery, the deposit-based investment model has gained favor among high-net-worth individuals due to its high security and cost-effectiveness. Similar deposit-based investment migration policies have been introduced by countries like South Korea, Turkey, and Egypt, each with varying requirements regarding investment amount, eligibility criteria, duration, and procedures. However, the UAE’s deposit-based model possesses its unique allure, making it a compelling option for affluent individuals worldwide seeking to combine investment with residency acquisition.

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The True Low-Risk ‘Dollar’ Asset Allocation

As a nation heavily reliant on oil resources and with a trade structure deeply tied to the political and economic factors, the UAE and several other Middle Eastern countries have used the US dollar as their settlement currency since the 1970s. The oil-dollar system has persisted to this day. To mitigate risks and cost losses from currency fluctuations in oil import and export trade, the UAE government has maintained a fixed exchange rate policy pegging the Emirati dirham to the US dollar at 3.67:1 since 1980. With the support of its liberal economic policies, the UAE has long been a hotspot for international investment.

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With deposits, inherently lower-risk assets, being firmly linked to the US dollar, it undoubtedly adds an extra layer of security to financial investments. Investing 2 million dirhams in a two-year fixed deposit in a UAE bank not only eliminates the risk of asset depreciation but also effectively shields against the impact of current global economic conditions affecting other currencies. This can be seen as a genuine “dollar” asset allocation strategy.

Robust Banking Sector Ensures Deposit Security

As previously mentioned, the UAE’s open monetary policy has attracted a significant influx of foreign investment, leading to the emergence of various trade services. In this process, the local banking sector has experienced substantial development. Particularly in the city of Dubai, which has relatively limited oil resources, a diversified economic policy has long been in place, necessitating a robust banking system to support large-scale trade activities. From the current development perspective, the banking sector in the UAE is at the forefront of the industry. In 2023, nine UAE banks entered the Brand Finance Global Banking Brand Value 500, with two among the top 100. According to the banking sector development report released by the UAE Central Bank, driven by growth in the private and private sectors, UAE bank assets surpassed 4 trillion dirhams for the first time in November 2023, demonstrating strong growth momentum. Furthermore, it is evident that several of the largest banks in the UAE have government and state capital support, providing fundamental assurance for their banking asset strength.

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Amidst the overall robustness of the banking sector in the UAE, the security of bank accounts is a crucial consideration for international deposit management. With a strong banking infrastructure in place, investors have a wide array of options to choose from. Moreover, under the UAE’s Golden Visa program, deposit requirements are relatively flexible: investors only need to deposit funds into personal accounts rather than through the central bank or national funds. This means that investors can closely monitor their accounts and funds, whether through personal bank managers or mobile banking, allowing for real-time access to account information, including deposit interest rates and more. With policy support and backing from banks, the security of deposits is ensured.

Stable Investments: Obtaining Residency with Ease

In addition to securing long-term residency, the UAE Golden Visa, which allows deposits into personal accounts, serves as a personal financial management tool. UAE banks offer competitive fixed deposit rates to their clients. Taking ADCB (Abu Dhabi Commercial Bank) and FAB (First Abu Dhabi Bank) as examples, long-term fixed deposits can yield annualized rates exceeding 4%, a level relatively higher than those offered by international banks. Let’s do the math: with a fixed deposit of 2 million dirhams at an annualized rate of 4%, the annual interest income would be around 80,000 dirhams. Not only does this cover the visa application fees, but it also presents a cost-effective investment opportunity in today’s market. Essentially, investors can obtain a 10-year Golden Visa residency “for free” while enjoying stable and secure investment returns.

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In Addition, Tax-Free Income and Favorable Forex Policies Enhance UAE Deposits

Furthermore, the UAE’s absence of personal income tax means that the returns generated from deposits are not subject to any deductions; what you earn is what you get. Additionally, the UAE implements a friendly foreign exchange management system, with no restrictions on forex quotas. Under the premise of complying with the UAE government’s anti-money laundering regulations, individuals are free to transfer funds in and out of the country, providing convenience for high-net-worth individuals accustomed to international investments.

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Flexibly Achieving Wealth and Residency Simultaneously

For individuals primarily seeking a 10-year UAE long-term residency, the flexibility is evident from the Golden Visa legislation: with a deposit of 2 million dirhams, completion of a two-year fixed deposit is all it takes to initiate the visa application process with a certificate provided by the bank manager. The process is simple and does not require waiting. After the initial two-year period, the deposit can be withdrawn, avoiding long-term capital commitment. Moreover, withdrawing the deposit does not affect the acquired 10-year residency. Upon the expiry of the residency after 10 years, simply repeating the same procedure, completing a two-year deposit, qualifies for another Golden Visa application.

References:

https://twitter.com/UAEmediaoffice/status/1516044713626845186/photo/1

https://u.ae/en/information-and-services/visa-and-emirates-id/residence-visas/golden-visa

https://www.centralbank.ae/en/forex-eibor/exchange-rates/

https://static.brandirectory.com/reports/brand-finance-banking-500-2023-preview.pdf

https://www.adcb.com/en/personal/accounts/fixed-deposits/fixed-deposit-account.aspx

https://www.bankfab.com/v1/en-ae/sd-rate

https://u.ae/en/information-and-services/finance-and-investment/taxation