Abu Dhabi introduces 3% tax on expat property rentals

Expats renting homes in Abu Dhabi will have to pay a 3 per cent municipal fee on the value of their yearly lease, it was reported today.

Details of the charge were revealed in the February edition of the Official Gazette following a decision by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed, according to local daily The National.

The fee, which will not be charged for Emiratis, will go towards Tawtheeq and registration costs for tenancy contracts.

It will be collected by the Abu Dhabi Water and Electricity Authority via utility bills on a monthly basis unless the contract stipulates a different payment schedule.

A Department of Municipal Affairs and Transport spokesperson confirmed the “recently introduced” charge to the publication.

The system will bring Abu Dhabi in line with neighbouring Dubai where rentals are subject to a 5 per cent housing tax through bills from Dubai Water and Electricity Authority.

It was also announced this week that the emirate would begin imposing a 4 per cent fee on hotel bills.

Currently, hotels in Abu Dhabi charge guests and customers a 6 per cent city tax and a 10 per cent service charge.

The move by Abu Dhabi follows a similar “tourism dirham” introduced by Dubai in 2014. The charge varies between Dhs 7 and Dhs 20 per room, per night, depending on the hotel category and rating.

Both fees come as the emirate tackles a budget deficit linked to low oil prices.