Dubai Dh1.5 Billion Tax Relief Package: How It Could Support Hospitality and UAE Businesses

Dubai has approved a new Dubai Dh1.5 billion tax relief package aimed at supporting businesses, tourism operators, hotels, restaurants, schools, logistics companies and other affected sectors in 2026.

The package includes the temporary suspension of key hospitality-related charges, including the nightly hotel tax and the 7% municipal tax applied to hotel and restaurant bills, according to a report by The National. The measures form part of 33 initiatives expected to be implemented over a period of three to 12 months.

What Is Included in the Dubai Dh1.5 Billion Tax Relief Package?

The most immediate impact is expected to be felt by Dubai’s hospitality and tourism sectors. The package reportedly includes exemptions from collecting the Tourism Dirham and sales fees on hotel rooms and restaurants, as well as relief linked to holiday home permits, event permits, exhibitions, conferences, tour guide fees and desert safari activities.

For restaurants and hotels, this may provide short-term breathing space by reducing the cost burden passed through bills and operational fees. For tourism-related businesses, the relief could help manage seasonal pressure, weaker demand, and cash-flow constraints.

Why the Hotel and Restaurant Tax Suspension Matters

The suspension of hotel and restaurant charges is particularly relevant for businesses exposed to tourism, leisure and consumer spending. Lower charges may support pricing flexibility, help preserve margins, and encourage customer activity during a challenging period.

However, businesses should avoid treating the relief as a standalone solution. Temporary exemptions can ease pressure, but they do not replace the need for careful budgeting, VAT compliance, corporate tax planning and cost control.

In an interview with Family Business Forum, Lorenzo Tosonotti, Partner at our Dubai office and Registered Tax Agent at the UAE Federal Tax Authority, discussed Dubai’s earlier response to recent regional uncertainty, including the previous Dh1 billion business support package. He highlighted how Dubai’s targeted measures can support the economic system without losing sight of a long-term vision. For businesses, the key is not only to benefit from short-term relief, but to include these measures within a broader and more sustainable strategy.

Key Business Actions to Consider

Companies affected by the Dubai Dh1.5 billion tax relief package should review:

• Which fees, taxes or charges apply to their specific activity
• Whether relief is automatic or requires an application
• The expected duration of the exemption or deferral
• Cash-flow forecasts for the next three to 12 months
• VAT, corporate tax and accounting treatment of any reduced fees
• Contract pricing, supplier terms and customer billing policies

For businesses in hospitality, events, education, real estate, logistics and tourism, the package may create a useful opportunity to reassess short-term financial planning. It may also help companies decide whether to defer non-essential spending, restructure supplier commitments, or preserve working capital.

A Practical View for UAE Businesses

The Dubai Dh1.5 billion tax relief package reinforces Dubai’s proactive approach to supporting the private sector. For business owners, the key point is not only to identify available relief, but to understand how it affects reporting, compliance and future planning.

As a UK/UAE boutique accountancy and tax advisory firm, we recommend assessing the relief in the context of your wider tax position, accounting records and commercial strategy. The businesses that benefit most will be those that act quickly, document the impact clearly, and remain compliant while using the available support effectively. You can also learn more about our tax, accounting and advisory services here.