Dubai ends hefty alcohol tax to boost business, tourism

The initiative will trial for a year and the government is likely to monitor how effectively the lower prices are passed on to consumers

With greater competition from Persian Gulf neighbours such as Saudi Arabia and Qatar, Dubai has tried to make itself more attractive to foreigners

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A waitress serves customers beer at a restaurant in Dubai. Dubai ended its 30 per cent tax on alcohol sales in the sheikhdom on January 1 and made its required liquor licenses free to obtain, ending a long-standing source of revenue for its ruling family to apparently further boost its tourism to the emirate. Photo: AP

Published: 9:00pm, 2 Jan 2023

Dubai kicked off the new year by scrapping a 30 per cent tax on alcohol sales and making liquor licences free, in an apparent move to bolster its status as the Middle East’s leading business and tourism hub.

Faced with increasing competition from Persian Gulf neighbours such as Saudi Arabia and Qatar, the government has introduced a series of rules over the past few years to make itself more attractive for foreigners to live and work.

Tourism is a key plank of the emirate’s economy, but it has been geared predominantly toward the luxury segment. The latest move will leave Dubai better-positioned to cater to wider swathes of the market.

Tourists take photos at the top of Dubai’s Burj Khalifa, the world’s tallest building. Photo: AFP

The move is “extremely positive” for restaurants and hotels, said Tim Cordon, Radisson Hotel Group’s chief operating officer for the Middle East and Africa.

Liquor is widely available in Dubai, but a pint of beer can cost more than US$15 at restaurants and bottles of wine can start at more than US$100. That has prompted many residents to drive to other emirates like Umm Al Quwain, about 80km from Dubai, where prices are much lower.

One of Dubai’s two alcohol distributors, Maritime and Mercantile International, announced the move with advertisements proclaiming an end to these long drives. Dubai’s other state-linked distributor, African & Eastern, has already cut prices to reflect the removal of the sales tax, it said in an Instagram post.

Both firms said liquor licences, which cost about US$70 a year, will now be free. They will still be needed because the United Arab Emirates (UAE) restricts sales of alcohol to Muslims.