Expats living in Abu Dhabi will now have to pay a three percent fee on their rent as a municipality contract fee, according to the Official Gazette.
The Abu Dhabi water and electricity authority will collect the new charge along with the tenant’s monthly electricity and water bills. All natural citizens of the Emirate are exempted.
Earlier in the week, the authorities imposed a four percent fee on hotel stays.
Economic experts said the three percent fee on rentals is likely to have a greater impact than the hotel tax, given the importance of rent as a proportion of overall spending by expats.
According to Dr Monica Malik, chief economist at Abu Dhabi Commercial Bank, this move, along with the lower oil price and the wider reform measures, are likely to lead to a deceleration in private consumption in 2016. “The broadening of revenue measures is positive for the fiscal position. Abu Dhabi remains proactive in the fiscal reform front,” Malik said.
In Dubai, rentals are already subject to a five percent housing fee through the Dubai water and electricity authority.
Local residents in Abu Dhabi said although this move may help rental services in the long run, concerns remain. Many foreign expats are worried by the move. Expats said that it will affect their monthly expenditure.
“If my annual rent is Dh 130,000 and I’m already seven months into the rental contract, does it mean that I have to pay Dh 3,900 or just pay for the remaining five months of the contract?” asked Romanian resident Magdelana Candea.