Dubai removes its 30% alcohol tax in a bid to attract more tourism
The media, not the hotels themselves, often label hotels like Burj Al Arab as “six-star” or “seven-star” hotels.
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DUBAI, United Arab Emirates — Dubai will eliminate its 30% tax on alcohol sales for the rest of the year, the emirate’s municipality announced Monday, the latest move in a series of liberalizing policy changes in recent years aimed at boost tourism and attract more foreign residents.
“Dubai Municipality has temporarily stopped charging the 30% fee to alcoholic beverage companies for a period of one year from the beginning of 01/01/2023 to the end of 12/31/2023. Businesses authorized to sell in the Emirate of Dubai have been notified of this decision,” the Dubai Municipality wrote in a post on its official Twitter account.
The move is likely to be an attempt to increase tourism and stimulate more business between visitors and residents as Dubai progresses in their goal of becoming the “happiest place on Earth”. Alcohol is notoriously expensive in Dubai, with a pint of beer typically going for $15 and a glass of wine going up to $20 or more.
Local alcohol distributors were the first to announce the news. Dubai-based spirits chain Maritime and Mercantile International (MMI) wrote on its Facebook page on Sunday: “Now you can: save 30% on the council tax on spirits. We have reflected this in all our prices!” However, he added that the UAE’s 5% sales tax (VAT) still applies.
He also said that personal liquor licences, which were previously a requirement for all Dubai residents to buy alcohol in stores and cost 270 dirhams ($73.50), are now free. Prior to January 1, liquor licenses had to be renewed annually and had a processing time of about four weeks. However, buying alcohol in bars did not require any license.
It is not certain if the new free licenses will continue to have the same processing times or renewal requirements. Dubai is also the only emirate in the United Arab Emirates to require residents to obtain a liquor license for in-store purchases; in five other emirates, including Abu Dhabi, no license was required, and in the most conservative emirate of the United Arab Emirates, Sharjah, the sale of alcohol is not allowed.
Some Dubai residents were not happy about the abrupt announcement, having recently paid their full annual license fee.
“I just got the license a couple of days ago and paid for it. Can someone explain how this happened? Why wasn’t this mentioned then?” wrote a Facebook user in a comment on the MMI post.
“My husband paid for the license 2 days ago, I wish you would have said something! And did not receive any coupon as mentioned on your page and website. Definitely feel cheated,” another user wrote.
One of the users said that MMI offered him a free bottle of wine as compensation, which he described as “not acceptable”. CNBC has reached out to MMI for comment.
More generally, residents celebrated and welcomed the news. The announcement also comes as neighboring Saudi Arabia increases its apparent push to supplant the United Arab Emirates as the region’s tourism and business capital. Saudi Arabia remains a dry country, and its strict laws and largely conservative society are barriers for many would-be foreign residents.
The United Arab Emirates, by contrast, and in particular its commercial capital of Dubai, is home to a 90% diverse expatriate population and has long offered lifestyles comparable to those in the Western world. The city has countless bars, nightclubs, and restaurants that serve alcohol, conservative dress is not required, all major religions are allowed to establish places of worship, and cohabitation before marriage is legal, while in Saudi Arabia and some other Persian Gulf states it is not.
Women bathers sit along a beach in the Gulf emirate of Dubai on July 24, 2020, while the Burj al-Arab hotel is visible behind.
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The United Arab Emirates also recently switched its Islamic weekend from Friday to Saturday to the Western weekend from Saturday to Sunday, to be in line with much of the rest of the world, and began offering a remote worker visa through of the coronavirus pandemic as more people embrace a remote work lifestyle.
“Dubai has clearly stood out in terms of the speed at which its tourism market has recovered since the pandemic,” Karim Jetha, chief investment officer at Dubai-based asset management firm Longdean Capital, told CNBC.
“The decision to suspend taxes on alcohol follows moves to change your weekend to Saturday and Sunday and expanding access to long-term resident visas. As a collective, these initiatives should boost tourism and encourage more expats to think of Dubai as home,” he said.