Abu Dhabi plans increase to municipality tax

The 3 per cent tax was first announced in 2016



Abu Dhabi’s Executive Council is reportedly planning to increase the emirate’s municipality fee for foreign residents renting property.

The National cited a circular as confirming plans to increase the fee from 3 per cent for residential properties only.

Read: Abu Dhabi introduces 3% tax on expat property rentals

The emirate first announced the fee in 2016. It applies to annual property leases and is collected via utility bills on a monthly basis unless the contract stipulates a different payment schedule.

The extent of the latest increase and when it will be introduced is not clear and different rates could be applied to villas and apartments, according to the publication.

The associated law is already in place.

The increase comes at a bad time for landlords with Abu Dhabi rents and property prices already under pressure over the last year and a half due to the depressed job market and new supply.

A first quarter report by real estate firm Asteco showed apartment and villa rental rates were down 3 per cent and 2 per cent from the end of 2017 and 11 per cent and 9 per cent year-on-year.

Read: Abu Dhabi property slump continues in Q1 2018

Property listings site Bayut said rents fell by nearly a quarter in some areas compared to the same period in 2017.

Read: Revealed: Where Abu Dhabi property prices, rents rose and fell in Q1

Consumers in the capital have also had to absorb higher costs for goods after a 5 per cent value added tax was introduced in the UAE on January 1.

This saw consumer prices rise 4.5 per cent in January and February, with particularly noticeable increases in food and beverage prices.

However, the depressed property market prevented inflation from rising further.

Read: Abu Dhabi consumer prices rise 4.5% in Jan, Feb