Business leaders line up to welcome scrapping of Dubai’s 30% alcohol tax

Business leaders line up to welcome scrapping of Dubai’s 30% alcohol tax

The hospitality industry is likely to see bigger profits following the removal of Dubai’s 30% municipality alcohol sales tax, while commercial landlords are expected to benefit in the longer term.

Industry chiefs impacted by the change welcomed the move, which came into effect on January 1, with real-estate firm CBRE describing it as “excellent news” for owners of hospitality properties that have chosen to operate rather than rent F&B outlets.

“The most likely impact in the short term beyond increased F&B contribution will be a sharpening of profitability ratios regardless of how much of the saving is passed on to consumers,” said Ali Manzoor, the head of Hospitality, Hotels and Tourism, CBRE Middle East.

“What would be interesting would be to look back in a year to see how departmental income has changed within the context of dry properties for which this legislation will have little impact,” he added.

The change is on a one-year trial, meaning the tax could be reinstated in 2024, but it is one of a raft of liberalisations occurring in Dubai and the UAE in recent years.

There is unlikely to be a change in hospitality rents as a result of the tax removal in the short term, said Manzoor.