18 Feb 2020

UAE free zones without E-channel deposits

What is e-channel?

E-channel UAE is still quite a new concept in this country. It was introduced in 2018. In a nutshell, it is a system that connects a free zone with the immigration authority in respective Emirate. The system was launched in order to streamline visa procedures and make all visas electronic.

Before the e-channel, when you applied for a resident visa, it used to be a hard copy and was supposed to be collected from the free zone personally. It made visa formalities very inconvenient and tied up your business and travel plans.

Benefits of e-channel

Before 2018, when new residents were coming to the UAE under entry visas, someone had to deposit the entry visa to the terminal of arrival or the applicant. The person had to collect his visa at a special counter and cross the border.

It created lots of hassle, especially if the visa was deposited to a wrong terminal or was not deposited on time.

Now each visa has become electronic and when it’s issued, it is sent to your email by the visa department of the free zone where your company is incorporated. Now you can just print it out and come to UAE using the printout rather than the original visa paper.

Downsides of e-channel

Apart from the benefits, e-channel introduction in 2018 created lots of complaints from business owners. Complaints were about the high fees.

No wonder. In addition to the fees of business incorporation, each company eligible for resident visas had to pay a 5,000 AED deposit to the immigration authority plus the e-channel registration fees of about 2,100-2,400 AED.

The deposit of 5,000 AED is refunded only in case of business liquidation. Usually, it takes 2-3 months to get a refund cheque from the immigration.

In total, the extra expenses amounted up to 7,400 AED, which is quite a lot for small businesses. For example, you can find a business setup in UAE package eligible for 1 visa for 11,000 AED, which is a great bargain. But have to pay more than 50% of the package for the e-channel formality.

E-channel in UAE free zones VS in Dubai

E-channel was the system introduced by the capital of UAE - Abu Dhabi. It was implemented with the introduction of additional fees by all the emirates, with the exception of Dubai.

Dubai has never had e-channel deposits or registration fees. The reason is that this Emirate has its own independent immigration system, which is not governed by Abu Dhabi.

All the other Emirates who greatly depend on Abu Dhabi and comply with Abu Dhabi’s immigration rules had to start the e-channel system. It made a total of 6 Emirates including Abu Dhabi itself.

All this made business setup services in Dubai more demanded. No surprise - e-channel fees make the prices of business setup in other Emirates not much different from Dubai fees, which naturally used to be a bit higher.

If you are seeking to get Dubai permanent residency through a freelance permit setup, you will also not be overcharged - e-channel does not apply to Dubai freelancers either.

E-channel updates 2020

Since 2019 many free zones in a competition to provide a better price to the clients started to make offers of e-channel deposit waivers.

Some free zones used to do monthly offers, others removed e-channel deposit fees for certain packages completely.

Looking behind it, the immigration authority is actually still charging the free zones e-channel deposits. But now they have chosen to pay those on behalf of the clients to lessen the burden on their pockets.

Indeed, a discount of 5,000 AED looks like a great offer. Now, as a client, you just need to pay the e-channel registration fee of 2,100 AED, which is a tolerable amount.

Free zones without e-channel

More and more free zones started to follow the promotions, which created a great number of those who waived the e-channel by now. UAE free zone company setup has become more affordable again!

Let us look at the free zones without an e-channel deposit:

Note, that in all of them it is waived only for setups without physical offices. If you are renting an executive dedicated office, the e-channel deposit will be charged. It won’t be charged in Dubai at all.

Free Zones that are still charging the e-channel deposit:

We hope that these zones will waive the unnecessary deposit fees soon. Meanwhile, contact business consultants in Dubai to find out the exact fees of all the free zones including business registration, renewal and visa formalities.