Dubai suspends alcohol tax fee, including the levy?

Dubai, United Arab Emirates started the New Year by suspending its 30% alcohol tax. This move could help Dubai to attract more tourists, businesses, and increase regional competition.

Dubai removed the tax on Sunday and charged the fee for the license required to buy alcohol. Local beverage distributors confirmed that the tax was eliminated.

The Dubai Media Office and the government of the Emirate did not immediately respond to a request for comment.

Dubai’s ability to offer liquor at much lower prices is likely to help it become a center for tourism and commerce in the Middle East. This is at a time where economists are warning about a global economic slowdown which could affect spending on leisure and travel.

Dubai is home to more than 90% of the world’s foreign residents. In contrast to nearby Saudi Arabia and Kuwait where alcohol is still banned, and Qatar where it can be purchased with greater restrictions, alcohol has been readily available in Dubai for years. However, the high municipality tax has driven up alcohol prices in the city state. Residents are complaining about the rising cost to live and the fact that tourism is often oriented towards luxury.

These changes are likely to boost the local hospitality industry, Maritime and Mercantile International said on Twitter Monday.

African + Eastern, another distributor of liquor, said that “the prices are here to remain and are on an extended trial.” According to The Financial Times, the suspension of tax would only last for a year. Industry executives were cited.

“Huge credit to Dubai for taking such bold decisions,” Jason Dixon (chief executive of African + Eastern) said Monday. He also stated that the company would transfer all savings to consumers. “This announcement will be particularly transformative for residents and tourists.”

It wasn’t immediately clear how Dubai’s elimination of the alcohol tax might impact government finances. The emirate doesn’t collect personal income tax. However, unlike Abu Dhabi, the country has no oil resources. It relies on revenue from other taxes and fee, including the levy for alcohol. The United Arab Emirates plans on introducing a 9% corporate tax in the coming year.

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