Q&A: What Abu Dhabi’s 3 per cent municipality fee means for you

Everything you need to know about Abu Dhabi's 3 per cent municipality fee on expatriate rent contracts.

Abu Dhabi introduced a municipality fee in February 2016 on all expatriate households, payable through the ADDC bill. Mona Al Marzooqi / The National
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The Abu Dhabi municipality has confirmed that it will begin imposing its fee on rental contracts this month. This includes a backdated portion from February last year, when the law was introduced. Here is everything you need to know about the fee.

What is the municipality fee?

It is a municipality charge of 3 per cent of the value of an annual rental contract in the emirate of Abu Dhabi. The decision to levy the fee was published in the Official Gazette in February last year. It is to be collected through utility bills issued by the Abu Dhabi Distribution Company.

Who has to pay it?

All expatriate tenants living in the emirate of Abu Dhabi.

Why has it been backdated to February 2016?

That was when the decision was officially made to charge the fee, and by law it needs to be paid from that date. However, there has been a delay in collecting it until now.

Can it be paid in instalments?

The fee is paid in monthly instalments, but the backdated portion must be paid at once.

When does it have to be paid by?

After it is included in your utility bill.


Abu Dhabi municipality tax

The new municipality fee payable by every expatriate tenant in Abu Dhabi has begun appearing in water and electricity bills from Abu Dhabi Distribution Company. Delores Johnson / The National

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What if the landlord currently pays the tenant’s ADDC bill?

It is the landlord’s responsibility to pay it, and they can choose to pass on the cost to their tenants at their discretion.

What happens if the tenant / landlord does not pay the fee?

As it is collected by ADDC, any arrears will be dealt with in the normal manner.

What if I own my own property in Abu Dhabi?

Home owners are not required to pay the fee.

What if my rental contract has changed since last February (if, say, you have moved and your rent has since gone up / down)?

The system is able to adjust the fee amount based on the latest contract registered under Tawtheeq.

Will residents who have just exited the country have to pay?

It is charged through your utility bills so it should not affect those no longer living in Abu Dhabi.

Does something similar exist in Dubai?

Dubai imposes a 5 per cent municipal housing fee, also payable through utility bills.

Is VAT on the way to the UAE as well?

In an era of lower oil prices, governments around the region are looking to diversify their sources of income. A GCC-wide Value Added Tax is planned as one possible new revenue stream. The National Bank of Abu Dhabi estimates that the new municipality charge is likely to boost government revenue by about Dh612 million a year. The Abu Dhabi government has also introduced new fees for the tourism sector.


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