Expats now have to pay tax on rent in Abu Dhabi
If you’re an expat and you rent in Abu Dhabi you’ll now have to pay a 3 per cent municipal fee on the value of your yearly lease, every year.
The decision made by H.H. Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, was announced in the February edition of the Official Gazette, however, it hasn’t yet been mentioned when the new charge will come into practice.
The fee is only applicable to expats, and Emiratis won’t be charged, with the money going towards Tawtheeq and registration costs for tenancy contracts.
The 3 per cent municipal fee will be collected by the Abu Dhabi Water and Electricity Authority through utility bills on a monthly basis, unless the rental contract states otherwise.
So, for a Dhs90,000 a year one-bedroom apartment, that’s an extra Dhs2,700 on your yearly rent. For those paying Dhs200,000 a year on rent, the 3 per cent means another Dhs6,000 out of pocket.
The introduction of the new fees will bring Abu Dhabi up to par with their neighbour Dubai, where rentals are subject to a 5 per cent housing tax through Dubai Water and Electricity Authority.
The new 3 per cent municipal fee is not the only fee to have been recently introduced though. It was announced this week that Abu Dhabi will also begin imposing a 4 per cent fee on hotel bills, on top of the 6 per cent city tax and 10 per cent service charge that they already have.
With a rising cost of living and fewer people receiving pay rises, the new taxes may prove trouble for some. Both the municipal and hotel fee have been introduced as the region has to rethink its economy due to oil prices.