ADDC website reveals new rates for municipality fees in Abu Dhabi – more than doubling in some cases

Municipality fees in Abu Dhabi will rise to up to 7.5 per cent in the case of residential villas, according to the websiteof the emirate’s utility the Abu Dhabi Distribution Company (ADDC), which is responsible for collecting the charge.

The fee, which was previously 3 per cent of the value of an annual rental contract, is now detailed on ADDC’s website as being 5 per cent for “all premises” other than residential villas, which are subject to a 7.5 per cent charge.

As previously reported by The National, the law related to changes in the fees is already in effect. The fee will be applied to bills as of May 17, 2018, almost one month before the details were announced.

The indicated level of increase more than doubles the fee for residential villas – meaning tenants paying Dh200,000 for an annual rental contract for a villa will now pay Dh1,250 a month, as opposed to Dh500 a month previously.

Emiratis, homeowners and government employees whose rent is paid by the department or agency for which they work are exempt.

ADDC, which collects municipality fees on behalf of the Department of Municipal Affairs and Transport, said on its website that the charges are “calculated as 5 per cent for all premises other than Residential Villas, and 7.5 per cent for Residential Villas of your rental contract’s value, with a minimum amount to pay of AED 450”.

“Although the total fee applies from the first day of the rental contract, the annual fees are broken down into monthly instalments to make your payments easier. You’ll receive a municipality fees bill each month, in addition to your water and electricity bills,” according to ADDC.

The move follows the introduction of the 3 per cent charge to the value of an annual rental contract for tenants in Abu Dhabi last year.

The municipality fee was originally announced in February 2016.

Funds gathered through the fee go towards the municipality authority’s use.

It is the latest in a series of charges that have been introduced as the country seeks to diversify from oil and gas to a knowledge-based economy.

VAT at 5 per cent was imposed from January 1, while a 100 per cent tax on cigarettes and 50 per cent charge on energy drinks was brought in last October.

Some experts have said that the rise in municipality fees could lead to a further reduction in rents over the short term and possibly boost property sales.