Why Dubai's move to scrap alcohol tax could mean a new happy hour for tourists

Dubai continues to captivate travelers, drawing nearly 13 million international visitors between January and November 2022. Tourists flock to the city to bask in the sun, shop at luxury malls, dine at world-class restaurants, and enjoy drinks at the city's many bars.

Though Dubai is a popular holiday destination and renowned as the Gulf’s 'party capital,' alcohol restrictions have made indulging in cocktails expensive and challenging. However, on January 1, the city announced it would eliminate its 30% alcohol tax, as well as the fee for a license required to purchase alcohol for private consumption. The license remains available only to non-Muslims over 21.

This change marks a significant shift for both residents and tourists, although public drinking in places like parks, beaches, and malls remains illegal. Being intoxicated in public or driving under the influence can lead to fines or even jail time.

'Dubai has been a global tourism hotspot even with the alcohol tax in place, offering so much for visitors that the high cost of alcohol was never a barrier,' says Magdalena Karolak, associate professor of Humanities and Social Sciences at a university in the UAE.

Karolak explains that the new alcohol regulations are part of a broader trend of social changes in recent years. These include a shift to a Saturday-Sunday weekend (previously Friday-Saturday), food outlets being allowed to serve throughout the day during Ramadan with fewer restrictions, and the introduction of a new family law for non-Muslim expats. This law, effective in February, will help expats address personal issues like divorce, inheritance, and custody without needing to return to their home countries.

'These changes position Dubai as an appealing destination for long-term residents, not just short-term tourists,' says Karolak. 'The removal of paperwork and fees for liquor licenses is also a significant step in making the city more attractive.'

Local Impact

However, there may be some downsides to these changes. Karolak notes that the alcohol restrictions have helped keep alcohol-related crime in check, such as driving under the influence and public disorder.

The permanence of these new regulations remains uncertain. Karolak believes the changes will be evaluated on a trial basis until the end of 2023. 'Whether they will continue or not depends on the effects felt in the emirate,' she says.

Samantha Wood, the founder of the Dubai-based restaurant review platform FooDiva.net, believes that the new policy will provide a significant boost to Dubai’s tourism industry.

'We've already seen a 30% price drop from alcohol distributors for both trade and retail,' Wood tells Dinogo. 'Naturally, consumers will expect restaurants to follow suit and reduce their alcohol prices by the same margin once new stock arrives.'

However, Wood suspects not all restaurants will pass on the full tax savings. 'I fear many will use this as an opportunity to offset rising costs and inflation, especially with the upcoming corporate tax implementation,' she explains.

Wood also believes the change will attract more global wine and spirits brands to Dubai, which in the past viewed the emirate as an expensive market to enter.

'It’s crucial to note that this initiative is only set for one year, allowing authorities to monitor how restaurants respond by lowering prices,' she adds. 'I hope restaurateurs will recognize the bigger picture and reduce their prices in a timely and meaningful way.'