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Wed 13 Apr 2016 10:12 AM

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Expat tenants in Abu Dhabi to be taxed 3% of rent

Move brings UAE capital into line with 5% fee already being levied in Dubai

Expat tenants in Abu Dhabi to be taxed 3% of rent
Skyscrapers stand on the skyline viewed from the Central Market in Abu Dhabi, United Arab Emirates, on Wednesday, Jan. 11, 2012. Abu Dhabi, the oil-rich sheikhdom that spent 36 billion Dirhams ($9.8 billion) bailing out its biggest developer in 2011, will probably reach for its checkbook again as property companies in the United Arab Emirates face a stalled market and deadlines to repay debt. (Credit: Bloomberg News)

All expatriate tenants in Abu Dhabi will be required to pay a 3 percent tax on their rents as part of a new municipality fee.

The National reported that the charge will be added to monthly utility bills.

Expat tenants in Dubai already pay a 5 percent municipality tax via their utility bills.

The decision to impose the fee was published in February edition of the Official Gazette, meaning the charge is already in operation, the newspaper said.

The new fee comes a day after a 4 percent tax was added to the cost of hotel stays in the UAE capital.

In recent months, GCC governments have given serious consideration to fiscal consolidation. The Saudi government has announced a year-on-year decline in planned spending for the first time in 14 years, while Oman has announced a 16 percent cut in spending for 2016 and a rise in corporation tax.

The GCC governments have also committed to establishing a region-wide value-added tax (VAT) over the medium term to lift non-oil revenues and most have already started on cutting energy subsidies.

Overall, government spending in the GCC region is expected to decline by 8 percent this year and rise more slowly in future years.