The introduction of a new tax hike in Abu Dhabi’s could see more than 2.3 million expats receiving significantly higher rent bills following the state-wide introduction of larger municipality fees.
The municipality fee was originally announced in February 2018, but charges weren’t implemented until last month. The increase in taxation relates to how annual rental is charged rising from 3% cent to 5% with the exception of residential villas, which are subject to a 7.5% charge.
ADDC, the company responsible for collecting the fees on behalf of the Department of Municipal Affairs and Transport, said in a statement on their website that although the total fee applies from the first day of the rental contract, although the annual fees are broken down into monthly instalments in a bid to make payments easier to afford.
As a result, households will receive a municipality fees bill each month, in addition to water and electricity bills.
Emiratis, those who own their homes and people under both direct and indirect government employment, will all be exempt from the rule change. As well as bringing in additional income, the move is hoped to discourage renting and that the advantages of purchasing real estate will become more prominent for foreigners working in the UAE.
In Abu Dhabi there are 550,000 UAE nationals in the city and with an estimated population of around 3m people, the change will hit the estimated 2.3m-2.5m expats the hardest.
This change comes on the back of a series of tax reforms, as reported, occuring throughout the UAE over recent years as it bids to make the transition away from a oil-based economy.