Suspension of alcohol tax in the Emirate of Dubai

published on 31 January 2023 | reading time approx. 2 minutes

In recent years, the government of Dubai's emirate had already allowed its residents to live a much more liberal lifestyle.

After easing entry and residence regulations, decriminalizing the cohabitation of opposite-sex unmarried couples and adapting the working week to the international standard of Monday to Friday, the Dubai government is now working further to offer settled residents and tourists more freedom and to strengthen Dubai's position as a center for tourism and investment in the Middle East. This clearly shows the role that tourism will play in Dubai's future economic development.

As of January 1, 2023, the government is now also suspending the 30 percent alcohol tax for one year until December 31, 2023. The tax previously applied to the consumption and sale of alcoholic beverages in licensed establishments or stores. Meanwhile, the 5 percent sales tax on the purchase and consumption of alcoholic beverages remains unaffected by the tax exemption.

However, the suspension of the alcohol tax has not yet been accompanied by an obligation on the part of stores or establishments to reduce prices accordingly, so it will become clear in the course of the suspension period to what extent this reduction will actually benefit consumers.

In addition, the license fee, which is still required for the purchase of alcohol, will be suspended for the same period, although this license is only required by residents of the emirate. Tourists, on the other hand, will be able to purchase alcohol without a license simply by presenting their passports.

In this way, the government continues to pursue its goals of asserting itself against other emirates and the neighboring countries of Saudi Arabia and Qatar and of continuously increasing the volume of tourism. In addition, a more Western lifestyle with more individual freedoms is to be made possible for the approximately 90 percent of inhabitants without Emirati citizenship.

Whether the suspension of the alcohol tax will be permanent and how the purchase and consumption of alcohol in Dubai will develop further can only be waited for at this point in time.