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The hidden costs of living in Dubai – Expenses, Rents and Fines

Cost of Living in Dubai

Dubai is projected as a tax free heaven, especially to expats that hail from countries with high tax rates. People, coming to Dubai, thought that can earn and save a lot so that they may retire peacefully after working some years in Dubai.

The reality is quite different. Dubai is not all glitter and there certainly is no free lunch. While there is no direct tax on the incomes earned in Dubai, there are number of indirect taxes, hidden charges and fees that result in very high cost of living and making it quite tough to survive in Dubai.

When you first arrive, there’s the cost of your medical, visa and work permit, for which your employer may or may not stump up (if you’re a trailing spouse, likely not). Then there’s your Emirates ID card, optional e-gate card, driving license, and, if your company doesn’t provide it, health insurance or government health card.

If you buy a car, there’s AED 385 to register it every year, the cost of a SALIK tag so you can drive on the main roads, and AED 4 every time you pass a SALIK gate.

With monthly rent payments still rarer than a rainy day, you may have to pay a significant chunk of rent upfront before you get the keys to your new home. And that’s before you consider the deposits you have to leave with utility companies just to get connected (AED 2,000 for water and electricity in Dubai – up to AED 4,500 in Sharjah); the high cost of water and electricity (it’s not unusual for a five-bedroom villa in an expat area to see monthly bills of AED 5,000); housing fees (five per cent of your annual rent); a home maintenance contract to keep air-conditioning running smoothly; the cost of an internet connection (AED 449 per month for 8MB broadband) and monthly landline and television connection fees.

If you have children, you can kiss goodbye to AED 30,000 to 80,000 per child per year (ranging from Indian to British-curriculum schools). As for health, a standard appointment with a GP in local clinic costs AED 200 a pop.

And now about the hidden costs of living in Dubai ….

Majorie van Leijen, in Emirates 24×7, has recorded real life examples of how such hidden costs of living are hurting expat life in Dubai.

Hidden costs of housing and renting out property in Dubai: A young Syrian who recently moved to Dubai started off in a shared living accommodation, where his payments included only the monthly rent and a fair share of the Dewa bill. Although this was convenient, he decided he wanted to have a place of his own, so he opted for a one-bedroom apartment.

“I estimated my budget and set my limits. I was able to afford an apartment for no more than Dh50,000 a year. It was not very hard to find. However, when I was ready to move, I realised I would need at least another three months to come up with the sum of money the first payment required – Dh12,800!”

Khaled’s one-bedroom apartment is rented for Dh48,000 per year, to be paid in six installments; Dh8,000 for the first payment. On top of that comes a five per cent deposit fee (Dh2,400) and a five per cent commission fee (Dh2,400) as the contract was mediated by a broker. He did not need to pay for service charges, nor for chiller charges, which are often billed separately by the developer. However, his Dewa bill includes a housing fee (five per cent of the total rent) and a sewerage fee, in addition to electricity and water consumption. On top of that, an internet, TV and phone connection will usually cost around Dh300-500.

Hidden bank charges and service fees: Banks and their fees are a big source of frustration for many UAE residents. Credit cards, although offered free-of-charge, are one of the main money-suckers and usually provide a charge-free period only. After that, there is a maintenance fee, late payment fee, over-limit fee, and standard annual fee. For loans, the list is even longer: there can be a processing fee, late payment fee, re-scheduling fee or property valuation fee. In case of insufficient funds on any account the bank can charge you a standing order fee. Furthermore, many banks throw fees for any kind of service: a new cheque book, card replacement, loan clearance clarification or any other statement required.

Mashreq Bank customers had to approach to the Central Bank to complaint about the exorbitant rates the bank was charging to them.

Hidden driving license charges:: A British expat in Dubai narrates how he paid Dh 8,500 for his driving license. “When I registered for a VIP driving course, I was told that I would pay Dh6,000 in installments, a deal for which I was willing to accept. I was never told that I needed to pay an extra Dh360 for the actual licence, and half-way through the course the highway exam was introduced, which required Dh400. Although some people were exempted from this fee because they registered before it was imposed, I was told that I had to pay for it.”

There are no standard rules for most of the transactions happening in Dubai. If there are rules, they are subject to abrupt changes, and updates are imposed without consultation with the thriving expat community, that makes the larger percentage of overall UAE population.

Tourists in Dubai to get a free mobile SIM

Taxi Commuters in Dubai have to pay Salik toll tax from 2013

Salik tax on Dubai taxis

Taxi rides in Dubai going to be dearer at least by Dhs 4 per trip, if you are passing through a Salik toll gate. Consider this as a New Year gift by the RTA.

The Salik toll system, when introduced in July 2007, was also applicable to taxis. However, following numerous complaints by commuters who felt cheated, the toll was scrapped for taxis from December 2008. There are currently four Salik gates in Dubai, situated at Al Garhoud Bridge, near Mall of the Emirates on Sheikh Zayed Road, Safa Park and aAl Al Maktoum Bridge.

Taxi operators have been asked to upgrade their meters to a recently introduced system called D8, in order to automate the process of adding Salik fee to taxi fare.

Its time for the residents of Dubai to put their legs to work, or use a Metro. God bless you, if you’re an unsuspecting tourist.

Tourists in Dubai to get a free mobile SIM

Not used Salik for a long time? Check your credit before its gone

Not used Salik for a long time? Check your credit before its gone

If you have not used your Salik pass for a certain time, you will lose all the money in the account.

According to a report by Gulf News, there is a rule by RTA that if a consumer has not utilized his salik card in 36 months, all the credit in it will be wiped clean.

The report quotes a SMS received by a Dubai-based Omani motorist, which read “Your Salik account 33010024 has been inactive for 35 months. If no trips are charged to this account in the next 14 days, your account balance will be forfeited.”

Mohammad Ebrahim Al Awadhi, Director ITS, at RTA’s Traffic and Roads Agency, says people have to use Salik only once in three years to save the money.

“The Salik credit will be forfeited should the user not pass the Salik toll gate over a period of three years. Secondly, as the time period of not passing under the toll gate is about to lapse {which is three years} he is notified through an SMS. Before the lapse of three years, if he passes even once, his credit will not be forfeited and he is again given a time period of three more years,” said Al Awadhi.

Another RTA official told Gulf News that there is no refund policy on Salik. “You cannot get refund of your money if you choose to cancel your Salik account at any stage,” he said.

“The RTA always claimed that Salik toll gates were installed to divert traffic and ease congestion on busy roads like Shaikh Zayed road and Al Garhoud bridge. They claimed that they want people to use alternative routes, but with this act it is clear that they only care about money and nothing else,” said another miffed motorist on condition of anonymity.

Earlier, Business Bay residents have raised complaints against Salik extortion.

So, for those who haven’t used Salik for a long time, your money in that account is not safe. This is another hidden cost of living in Dubai.

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Salik Extortion: Business Bay residents have to pay the toll, even for grocery run

Salik on Business Bay DubaiSalik, the toll system in Dubai, was supposedly implemented to ease congestion on Sheikh Zayed Road. However, it seems that it is now being using to extort Dubai residents.

Emirates 24|7 reports that Business Bay residents are crying foul over new roadworks that have blocked all other access points in and out of the area, forcing them to use the Al Safa Salik tollgate.

Some say access point to enter the district from the toll free Al Khail Road is still open, but the exit road is blocked off, forcing them to re route their cars and head to Sheikh Zayed Road.

Even a run to the grocery store is now forcing us to drive through the tollgates,” said Akanksha Mehta, a resident of Executive Towers in Business Bay who said the routes were blocked as early as the first week of April.

Mehta calculated that between her husband and her car, their daily average now in just Salik fees alone is Dh16 each.

“If this continues we will be forced to pay Dh350 a month in just Salik!” she said.

Another resident, who did not wished to be named but also resides in one of the Executive Towers’ blocks, said: “I don’t believe this excuse of construction work is really true. All I have seen are sandpits being shifted from one place to another, but no actual roadwork ever taking place.” The two-year-old resident of the neighbourhood blamed the Roads and Transports Authority.

The RTA reportedly collected Dh776 million in Salik fees in 2009 compared with Dh669m in 2008 and Dh214m over six months after July 2007, when the toll was introduced in Dubai. Car owners are charged Dh4 for passing through the gates.

Business Bay boasts a prime location, with average rents ranging between Dh60,000-Dh70,000 for a one-bedroom flat, Dh70,000-Dh90,000 for a two-bedroom and Dh95,000 to Dh110,000 for a three-bedroom.

dubai expat life

Cash starved Dubai to introduce new Salik Toll Gates

New Salik Toll Gates in Dubai

Although it is not officially declared by Dubai’s Roads and Transport Authority (RTA), word is on the streets that two new Salik toll gates are planned, brining the total number of toll gates in Dubai to 6.

Salik toll gates, which charge drivers AED4 each time they pass through, were launched in July 2007 under a plan to cut down congestion on Dubai’s roads.

The RTA last year earned around AED800m ($217m) from Salik, up from AED776m in 2009 and AED669m in 2008.

The RTA is also considering the privatisation of some of its services, such as water taxis.

From: Arabian Business

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Salik Road Toll dropped for Taxi Passengers

Taxi passengers in Dubai will no longer have to pay the Salik road toll.

The Roads and Transport Authority said the move was part of a series of initiatives aimed at improving taxi services.

Passengers currently have to pay the Dh4 Salik toll every time they pass under a gate.