By abolishing its high tax on alcohol, Dubai wants to make itself more attractive to tourists, which neighboring countries are increasingly vying for.
The 30 percent tax on alcohol has been suspended and the license fee that has been due up to now has been abolished, two major retailers announced on social media on Monday.
As confirmed by local media, the changes came into effect on Sunday and are initially valid for one year.
"With the elimination of the 30 percent tax and a free alcohol license, buying your favorite drinks is now easier and cheaper than ever," MMI, one of Dubai's two major alcohol suppliers, advertised on its Instagram account.
Retailer African+Eastern also confirmed that the special tax would no longer apply, but prices would still be subject to a 5% sales tax.
The government initially did not respond to a request from Reuters for comment.
Dubai is becoming more and more popular as a travel destination
Tourism is an important pillar of Dubai's economy: in the first half of 2022 alone, the number of foreign visitors increased by more than 180 percent compared to the same period in 2021 after the corona rules were relaxed.
Dubai's economy has therefore recovered quickly from the pandemic.
Gross domestic product grew by 4.6 percent in the first nine months of last year.
Liberalization of alcohol taxation is expected to further increase Dubai's appeal to tourists and resident expatriates, who are drawn to the more liberal lifestyle compared to other Gulf cities.
Home to the world's tallest building and islands shaped like palm trees, Dubai faces growing regional competition.
Saudi Arabia, for example, invests billions to increase its attractiveness for tourism and at the same time hosts major cultural and sporting events.