Dubai, United Arab Emirates, began the new year with a suspension of its 30% alcohol tax. This could help Dubai attract more tourists and businesses in a region that is experiencing growing competition.
Dubai lifted the tax and the license fee that people need to purchase alcohol, local beverage distributors stated.
The government of the emirate did not immediately confirm these policy changes and the Dubai Media Office didn’t respond to a request.
Dubai is expected to increase its position as the Middle East’s centre for tourism and business by offering liquor at significantly lower prices. This comes at a time when economists warn of a global slowdown that could impact travel and leisure spending.
Dubai has more than 90% foreign residents. Alcohol is readily available in Dubai for many years unlike neighboring Saudi Arabia, Kuwait, and Qatar where it remains prohibited. The high municipal tax pushed up alcohol prices in Dubai. Residents complain about rising living costs and tourists are often drawn to luxury.
These changes will likely give a boost the local hospitality sector, Maritime and Mercantile International (one of the country’s major distributors) said on LinkedIn Monday.
African + Eastern, another liquor distributor, stated in a statement that the prices “are here to stay” and were on a long-term trial. According to the Financial Times, the tax suspension would be in effect for one year. This was based on industry executives.
“Huge credit goes to Dubai government for making such a bold move,” Jason Dixon, chief executive at African + Eastern, stated Monday. He added that the company would pass the entire savings on to consumers. This announcement will have a transformative effect on residents and tourists.
It was unclear how Dubai’s decision to remove the alcohol tax would impact the government’s finances. Although the emirate doesn’t collect personal income taxes, unlike Abu Dhabi, it has limited oil resources and is dependent on other taxes and fees, which includes the alcohol levy. The United Arab Emirates will soon introduce a 9% corporate income taxes.