To attract expats and tourists
Now there is also cheap alcohol in Dubai
At the beginning of the year, Dubai abolished the alcohol tax. With the now cheaper alcoholic beverages, the emirate wants to stand out from its regional competitors in the fight for workers and tourists.
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Alcohol serving in a bar in Dubai: Since the New Year, there has been no alcohol tax in the emirate.
Jean Claude RaemyEditor Economics
The new year in Dubai got off to a “wet” start, so to speak: the emirate abolished the alcohol sales tax just at the beginning of the year. This was previously a whopping 30 percent. The obligation to pay for obtaining alcohol licenses has also been abolished. However, these remain mandatory for control reasons.
The new regulation should last for at least 12 months. The VAT of 5 percent on alcohol sales remains in place.
With these measures, alcohol consumption in Dubai is expected to become cheaper. A beer used to cost the equivalent of 10-15 francs. A bottle of average wine cost 100 francs. The two largest beverage distributors in the emirate have announced that the tax savings will be passed on to consumers. These are Maritime & Mercantile International, which belongs to the Emirates Group, and the semi-public African & Eastern.
The announcement by the companies came as a complete surprise at the beginning of the year. According to their own statements, both companies are based on a rule change in the emirate. So far, however, there has been no official comment from the authorities or the ruling family.
Why this change?
With the abolition of the tax, Dubai will lose considerable sums of money. Local media such as “The National” argue that Dubai wants to prevent residents and tourists from traveling to neighboring emirates to consume alcohol cheaper.
It is also conceivable that Dubai will trigger a further liberalization push in the fight for foreign workers and tourists. This could set one apart from more restrictive countries in the region. Alcohol is completely banned in Saudi Arabia, Kuwait, Iran and the Emirate of Sharjah. In Qatar or Oman there are high alcohol taxes.
80 percent of Dubai’s residents are expats, non-native residents and workers. In order to remain attractive to them, Dubai has been liberalizing for years. On the one hand, the issuing of immigration and work permits has been simplified. On the other hand, working conditions were increasingly adapted to western standards. Since last year, unmarried couples have also been allowed to live under the same roof.
There has been diversification in tourism. While Dubai was previously heavily geared towards luxury tourists, hotels in the 2 and 3 star segment have increasingly been built in recent years. This means that the high growth targets can continue to be met. Cheaper alcohol will drive this trend.
However, it cannot be assumed that Dubai will become a new Mallorca. It is still only allowed to drink alcohol at home, in your own hotel or in a licensed bar. If you want to buy alcohol for private consumption at official sales outlets, you have to apply for a license. This is only granted from the age of 21 and to non-Muslims.