The UAE’s decision to remove the heavy 30% tax on alcohol is a welcome effort as prices of drinks in the region tower above what they can be bought for in other nearby destinations. The tax however is paid on the volume purchased by the supplier so will your bill at the end of the night be 30% lower?. No it won’t be but it will be lower, let us explain …
The reality is suppliers pay 30% when they purchase the drinks in bulk. The bulk price for a bottle of wine or beer is quite low. The tax is added to the bulk purchase price and then all the costs of operation, staff, rent, DEWA are added on top. This is how you end up with a pint that ranges between 45 – 55 aed. Or 11.5 to 14 Euro’s. To put that in comparison in Cyprus it can be around 30 to 50% less. In Georgia it’s even lower so any reduction is welcome indeed.
So the bottom line is drinks with your dinner are about to get cheaper but by how much?. It’s difficult to say as the removal of the tax has only just happened. It is also worth a mention that your local restaurant and favourite watering hole will have purchased many months of drinks already. This means the tax has already been paid and they need to sell the current stock before they can purchase new stock tax free and pass that saving on.
Added to that each outlet should pass on the saving but who and how they do that remains to be seen. Our best guess is that prices will reduce by around 5 – 10 aed for your typical beer and more for other items. How this then reflects in the best happy hours in town and brunches will also be an exciting area to watch over the coming months.