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Dubai scraps alcohol tax to boost tourism

Dubai scraps alcohol tax to boost tourism

Sky-high booze prices often prompt Dubai residents to travel to neighboring emirates, where alcoholic beverages cost less

Any resident of Dubai, who wants to consume, transport or stock alcohol is legally required to possess a liquor license. The liquor licenses may only be issued to persons aged 21 or older, and cost 270 dirham ($73) a year, each.

There’s also a 30% tax on alcoholic beverages collected by Dubai government.

In Dubai, known as the Gulf’s “party capital,” the price of one bottle of beer often tops $10, while a bottle of wine may easily cost over $100. The sky-high booze prices often prompt Dubai residents to travel to neighboring emirates, where alcoholic beverages cost less.

According to an announcement from two major UAE retailers, as of this Sunday, Dubai government has eliminated a 30% tax on alcohol and 270-dirham fee for liquor licenses, making them free to obtain.

In a series of posts on Instagram, Maritime and Mercantile International (MMI), one of the largest alcohol stores in Dubai, praised the move as “BIG BIG NEWS,” celebrating that people “no longer need to make trips across the country to stock up on favorite drinks.”

“With the removal of [the] 30% municipality tax and FREE alcohol license, buying your favorite drinks is now easier and cheaper than ever!” MMI declared.

Another major emirati booze vendor, African + Eastern, confirmed the new. However, a 5% VAT rate still applies to alcoholic beverage purchases, the retailer added.

New regulations came into force yesterday, but it is not clear whether they are here to stay on a permanent basis. According to local media reports, new changes in alcohol trade laws are in their trial phase and will remain in effect for a year for now.

The decision to cut taxes on alcoholic drinks comes after Dubai approved a new tourism strategy in November in a bid to boost its competitiveness and attract 100 billion dirham ($27 billion) in additional investment by 2031.

According to a chief economist of Abu Dhabi Commercial Bank, Dubai government’s decision “should further support the tourism and hospitality sectors.”

The move will “also be welcomed by many residents, who are predominantly expatriates,” bank official added.

Nearly 90% of the population of the United Arab Emirates (UAE), where Dubai is the largest metropolis, are expatriates.

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