Dubai tightens rules on expat housing tax

by Ray Clancy on October 31, 2011

All expats expected to pay housing fees by June 2012

Rules are being tightened in Dubai to make sure that expats pay housing fees by the end of June next year in a crackdown aimed at reducing the numbers not being billed for the tax.

Dubai Municipality said that it is going to be more efficient in terms of sending out bills and tracing people as well as chasing non payers.

Authorities said around up to 60% of residents in Dubai currently pay the monthly fee, but said it will not backdate payments for those who have, to date, escaped the charge.

According to Addullah Hashin Abdulghafoor, fees and revenues officer at Dubai’s housing fee department the new rules should be in place by June 2012.

He defended the decision not to backdate fees.

‘Customers who haven’t been billed up until now are not going to be backdated. If we did that would mean customers facing a large bill through no fault of their own and it’s not something we feel is not appropriate to do,’ he explained.

Housing fees, billed through residents’ monthly utility bills, are calculated at 5% of the tenant’s annual rent or 5% of the property’s freehold value.

It was introduced in 2005 but Emiratis do not pay the charge, leading some residents to dub the fee an expat tax. Expats have long criticised the tax as unfair.

‘I have been paying a housing fee for as long as I can remember but many of my friends have never paid a housing fee until recently and some friends are still not paying,’ one Mirdif resident told Arabian Business.

‘I am 100% in favour of a system that applies to everyone. Dubai supposedly has had this housing fee system but has not collected millions of dirhams a year from everyone who should pay,’ he added.

Dubai authorities are currently collecting fees from 17 out of a possible 27 zones across the emirate, Abdulghafoor said, including all new residents in the remaining 10 areas.

Among the areas not yet fully covered include Al Barsha, Discovery Gardens, Palm Jumeirah, Burj Khalifa area and Dubai Marina.

Plans are underway to issue non paying residents with reminders to fill in online forms to ensure they are correctly billed. Those that fail to complete the application will see their housing fee calculated on estimated rent or property values from the city’s Real Estate Regulatory Authority (RERA).

‘We are going to remind them that they still have to register and if they don’t they will be billed as per the rental index. We’ll probably start sending the notices within a month or two and after that we’ll to start resuming the billing for the remaining cycles,’ said Abdulghafoor.

‘By filling in the form they guarantee being billed accurately, if they don’t do that then they risk being charged more than their actual rent,’ he added.

{ 1 comment… read it below or add one }

Robynne November 17, 2011 at 12:18 pm

"Customers who haven’t been billed up until now are not going to be backdated. If we did that would mean customers facing a large bill through no fault of their own and it’s not something we feel is not appropriate to do,’ he explained."
How is this different to those who have paid over the years, calculate an average house rent of aed160 000 *5% over 6 years – aed48000! Offer a reduction then to those who have paid since 2005! Typical to Dubai, taking but not giving back. I can understand expatriates complaining about this tax, tax on top of tax (DEWA). Not fair at all!

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