Dubai Suspends Alcohol Tax as Regional Competition Heats Up

While it is still the most popular regional destination for tourists and foreign workers, Dubai is facing increasing competition from Qatar and Saudi Arabia, where Crown Prince Mohammed bin Salman has been overhauling the kingdom’s oil-dependent economy and rapidly loosening social restrictions in an effort to make Riyadh, the capital, a global destination.

The Saudi government has reined in the religious police, eased a conservative dress code, sponsored concerts and raves, and offered its first tourist visas in 2019. Officials have also been deploying a mixture of incentives and ultimatums to persuade multinational companies to locate their regional headquarters in Riyadh instead of Dubai.

Last year, Prince Mohammed said he wanted to eventually increase the proportion of foreign residents to 70 percent of the kingdom’s population, from around one third now. That would require making Saudi Arabia a more appealing place for foreigners to live. While alcohol is still illegal, rumors have been spreading for years that the policy could change, perhaps in restricted zones or hotels — as it once was in Dubai.

A semi-independent city-state in the Muslim-majority United Arab Emirates, Dubai has been loosening its alcohol regulations for years. Nominally, the government requires individuals who want to buy alcohol to obtain a license, which are only available for non-Muslims over the age of 21. But in practice, bars, clubs and restaurants almost never ask to see a permit.

Over the past few years, the United Arab Emirates has also eased immigration rules, decriminalized cohabitation for unmarried couples, and changed to a global business-oriented working week of Monday through Friday, diverging from its neighbors, which maintain a weekend of Friday and Saturday to accommodate Islam’s communal Friday prayers.

Those policy changes were intended to make the country a more attractive place for foreigners to work and live. As in neighboring Qatar, the entire economy hinges on foreigners, from the low-wage workers who build skyscrapers and pump gasoline to highly-paid executives and Instagram influencers.

While some Emiratis are uncomfortable with the pace and direction of their country’s transformation, vocal dissent has been largely repressed.