Property owners are being wrongly billed for tens of thousands of dirhams in taxes from which they are exempt – and threatened with having utilities cut off if they do not pay.

It is the latest problem for the new municipality fee system, introduced in January.

Expatriate tenants must pay the municipality 3 per cent of their annual rent or loan repayments. The fee is collected through monthly power and water bills from Abu Dhabi Distribution Company, backdated to February last year.

But some homeowners who are exempt from the fee have been billed for 11 months to cover last year, and monthly payments this year. The utilities company has given them 14 days to pay or have their power and water switched off.

“Each month I’m billed close to AED 3,500 and they billed me AED 38,000 for 2016,” said the owner of a villa in Al Reef, valued at AED 1.7 million.

“I approached the municipality and ADDC. They told me it was not correct and it would be resolved soon.

ADDC acknowledged he was exempt but then sent him two notices threatening to cut off his power unless he paid.

Another homeowner, who received a bill for Dh48,000, said: “We’ve been suffering big time due to some big debate between the developer Manazel and ADDC and Abu Dhabi Municipality.”

“I may lose my tenant if I can’t provide him Tawtheeq,” he said. “I shuttled between the municipality and ADDC offices but nothing has been resolved yet, even though they promised to solve the issue soon.”

Homeowners and Emiratis, whether owners or tenants, are not required to pay the fee. Nor are government employees whose rent is paid by the department or agency for which they work.

Tenants of property owned by an Emirati are also exempt.

Abu Dhabi Municipality has acknowledged the problems and said it was coordinating with a company hired to develop the data for the new system.