Obama must strike a balance on surveillance


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Of all the ways in which the world changed after the events of September 11, 2001, one that continues to be fraught is determining the right balance between privacy and security.

Without the possibility of an objectively correct answer, legislators in the US and around the world have sought to find the fulcrum of fairness, or at least of public opinion - the point where the need to prevent terrorist acts is in equilibrium with the danger inherent in shadowy government agencies having evermore awareness of the details of the life of every individual.

In the two months since former National Security Agency contractor Edward Snowden began revealing startling details about the extent of surveillance, this debate on the compromise between security and privacy has intensified, and not only in the US.

Britons have been startled to learn of the extent to which their own security services cooperate with - and are subsidised by - the NSA. Two big German internet service providers said they will encrypt customers' emails. Two US-based providers of secure email, under government pressure to reveal users' data, have closed shop, so as to not "become complicit in crimes against the American people," in the words of one.

President Barack Obama is pushing back against the rising tide of public concern. In remarks on Friday he defended the programmes but promised to make them better understood and more palatable.

Mr Obama seems to be aware that Americans are increasingly wary of blindly trusting big government, even in the name of fighting terrorism, to decide by itself and in secret what information it will acquire about individuals, and how it will use the data.

The president's initiative so far features words rather than actions, and reaction has been mixed. The same day, the Guardian, reporting information from Mr Snowden, revealed that the NSA has, under a rule kept secret from the public, the power to delve more deeply than previously known into American citizens' email and phone calls, all without a warrant.

Revelations like that one will not help Mr Obama's case. At what point does government snooping become so intrusive and affect so many people that it can be considered as dangerous to society as a terrorist attack?

In an age when internet communication is essential to daily life, societies long proud of their liberty are now realising that they face this double-edged danger, and must decide how to respond to it.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

 

 

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