Drinkers look forward to enjoying Dubai's 30% tax cut on alcohol

Manager Richard Cowling expressed a sense of relief as customers flocked to his rooftop bar to enjoy Dubai's winter sunset over the Gulf and a 30% tax break on alcohol sales that the government announced last week.

The impact of the tax cut on prices will take time to filter through as stocks were purchased prior to Dec 31, the date the government announced the decision, but the mood at the Madinat Jumeirah, a complex whose architecture was inspired by medieval Gulf towns, is already changing.

"It is not something that we are going to see immediately impacting the industry, but it will happen quickly," said Cowling, Director of Operations at Gates Hospitality.

"(It's) fantastic news for us, especially going into the new year within the hospitality industry, we have seen massive increases in the cost to produce, cost of food ingredients, cost of cooking oils, energy costs over the last 12 months," he added.

Dubai has suspended a tax of 30% on alcohol and dropped a licence that individuals previously needed to buy alcohol in the commercial and tourism hub, a move which is expected to further boost the appeal of the emirate to tourists and expatriates drawn by its more liberal lifestyle compared to other Gulf cities.

The emirate is already one of the most visited cities in the world and the government is working on a plan to attract 25 million tourists a year by 2025. The government has merged the economy and tourism departments in a sign of the economic importance of the sector.

Dubai welcomed 7.1 million visitors in the first half of 2022, an increase of 183% compared to 2021 as the industry recovered swiftly from the Covid-19 crisis. The city's hotel occupancy rate reached 74% for the same period, the government has said.

But tax breaks and free alcohol licenses will be mostly welcomed by Dubai's 3.5 million residents, the majority of whom are expatriates.

"For the tourists, I really don't know, they are coming already to spend... for the residents... you need to have the license or something else, it is complicated, so it is much easier, I think it is much nicer," said Anastacia Bondar, a resident from Portugal.

"I think it is a great news... I am looking forward to seeing the price drop also in stores as well as in restaurants," said Fillipo Palamara, an Italian resident of Dubai.