From January 1, 2023, to December 1, 2023, Dubai Municipality will not be collecting the 30% municipality tax on alcoholic beverages.
In response to an online user’s question, the municipality made this information available via its official Twitter account, @DMunicipality.
The Dubai Municipality posted a tweet that said: “Please take note that the 30% tax received by the Dubai Municipality from alcoholic beverage producers has been temporarily halted for one year, beginning on January 1 and ending on December 31, 2023. All businesses with permits to sell alcohol in Dubai have been informed of this choice to take the appropriate action.”
What is the municipality tax of 30%?
The tax levied by the Dubai government is known as the municipality tax. Consumption taxes on products and services include value-added tax (VAT). According to Tyrone Reid, Group CEO of Maritime and Mercantile International (MMI) & Emirates Leisure Retail, the 30% municipality tax on alcoholic beverages has been eliminated, but the 5% VAT is still in effect.
African+Eastern also affirmed that the final price of alcoholic beverages will no longer contain the 30% municipality tax but will instead still include the 5% VAT.
What kinds of taxes are imposed?
In addition to VAT, often referred to as a goods and services tax (GST) in some other nations, and corporate tax on oil firms and foreign banks, the UAE imposes excise tax, also referred to as a “sin tax,” on energy drinks and cigarette products.
Excise taxes have been imposed since December 2019 on a number of products that are often bad for the environment or human health. This includes a 50% tax on carbonated beverages, a 100% tax on tobacco products, energy drinks, electronic smoking devices, and liquids used in such devices and instruments, and a 50% tax on any product with added sugar or other sweeteners.
“Items are subject to sin’ taxes because of their potential for harm or perceived expense to society. Sin taxes aim to discourage people from engaging in actions and behaviours that are bad for society. Municipal taxes, on the other hand, are more of a local tax that the government imposes for certain services, according to Dixit Jain, managing director of The Tax Experts DMCC, a Dubai-based tax advisory firm.
“So, for the people to understand, the municipal tax will be eliminated, which will save some money out of their pockets, but at the same time VAT will be charged when they buy, which is applied at a rate of 5%,”
License cost for alcohol eliminated
Retailers claim that alcohol license fees have also been eliminated in Dubai as a result of government regulations.
“We are implementing the Government of Dubai’s orders, therefore all people entitled to legally purchase alcoholic beverages in Dubai can apply for a personal liquor permit at… our… stores in Dubai, now free of charge,” Reid added.
How to submit a liquor license application in Dubai
Although a personal alcohol permit is still required to buy, consume, transport, or keep alcohol at home, according to updates from MMI and African+Eastern, the license charge has been eliminated in Dubai.
You only need to visit an MMI or African+Eastern store with one of your identity documents, such as an Emirates ID if you are a resident or a passport if you are a visitor, to obtain an alcohol license.
Rules to remember
Alcohol can only be drunk privately or in public locations that have a license if you are at least 21 years old.