Relocating to Dubai: Update on New Legislation
Posted by:Fiona Redford, Director, Supply Chain Management
Dubai is a vibrant, new city in every sense of the word, with a number of potential challenges for unprepared expatriates and business travellers. Three new pieces of legislation are coming into force in Dubai as 2018 gets underway. Mobility managers and relocating employees should be aware of the introduction of Valued Added Tax (VAT), changes to the property rental process, and changes to driving licence applications.
Value Added Tax (VAT)
From 1 January 2018, a VAT charge of 5% is being imposed in several Middle Eastern countries, including the whole of the United Arab Emirates (UAE) of which Dubai is a part.
VAT will be charged on items such as:
- Telecom and utilities (like internet, phone, water, electricity, etc.)
- Stationery relating to education
- Medicines and medical equipment
- Commercial rents
- Most importantly real estate agent fees will be subject to VAT
VAT exemptions include:
- Tuition fees
- Healthcare fees
- Residential rents
Relocation managers and expatriates should be aware that some ambiguity around the role of VAT currently exists. The UAE government is looking to clarify this situation and those with an interest in the VAT levy should stay appraised of situation.
Driving Licence Application Changes
The UAE Government has undertaken a unification of the driving license application process across the country, and implemented a fee increase. The new transfer fee increases from 420AED in Dubai and 200AED in Abu Dhabi, to a new fee of 600AED. The new total cost for exchanging a driving license in Dubai, including other fees, is now AED 870, plus the cost of an eye test and any required translation or attestation, based on country of origin. This follows on from changes in 2017 in which the initial licence period for new holders was reduced from 10 years to two years. After the initial two-year period, licences can be renewed successively for periods of five years. A one-year initial period applies for applicants below the age of 21.
Rental Process Update
The Dubai Land Department (DLD) is launching a unified lease contract for rental properties with the aim of creating a more professional real estate market. Real Estate Agencies and agents in Dubai will no longer be permitted to sign a lease or collect rental funds on behalf of the landlord, even with a valid Power of Attorney. Exceptions to this rule currently only exist for registrations to one of eight Tenancy Management companies that are listed on the DLD’s website (www.dubailand.gov.ae).
Advice for Relocation Managers
Following is advice for companies relocating international assignees to Dubai.
- Make sure that employees are aware of increases to local fees for items like VAT and drivers licences.
- Compensation payments should be reviewed and adjustments made as necessary, if applicable.
- Employees should allow extra time for the signing of lease contracts when selecting a property. This is particularly important when the landlord does not reside in Dubai, as contracts will need to be couriered directly to the landlord for signature.
- Given these recent changes affecting relocation to the UAE, mobility managers should keep up to date with information from their relocation provider. Cartus will keep you apprised about this and any other issues relating to UAE moves as more information becomes available.
For more information about relocating to the UAE, please read our UAE Market Watch.