The Chancellor of the Exchequer’s threat to impose a windfall tax on gas and oil companies raking in huge profits from the rising cost of energy is understood to have caused a split between the Treasury and the prime minister’s aides.
Pressure is piling on Rishi Sunak to produce a package of support to ease the cost of living for millions of people struggling with higher food and energy bills.
Inflation has rocketed to 9 per cent, a 40-year high.
The opposition Labour party has called for a one-off tax on the profits of oil and gas companies to help households and energy-intensive industries.
The Conservative-led government has in the past ruled out a windfall tax on energy companies, but Mr Sunak has recently said such a levy could not be ruled out if companies are not investing enough in new projects.
“If it doesn't happen soon and at a significant scale then no option is off the table,” he told MPs in the House of Commons this week.
Boris Johnson’s cabinet is split over the idea, with some ministers “intrinsically opposed” to the levy, according to Kit Malthouse, a senior member of the government. However, he stressed that the policy has not been ruled out.
“We are intrinsically opposed to that kind of taxation,” Mr Malthouse, the policing minister, told Times Radio when asked about a possible windfall tax. “We want to see a pattern of investment from that industry that will help us with our medium and long-term energy problems.
“But the chancellor reserves the right to take all steps he thinks necessary and he's in conversation with that industry all the time, I'm sure.
“My predilection as a Conservative generally is to have low and stable and predictable taxes, and that retrospective taxation is to be avoided, but there are Conservative administrations in the past who have felt the need to tax retrospectively and sometimes the circumstances might warrant that.”
The oil and gas industry has argued that unpredictable tax policies could deter investment and hit jobs.
Officials at the Treasury are convinced a windfall tax now looks “politically unavoidable”, The Times quoted a source as saying.
Mr Sunak in April signalled a possible shift in policy by hinting at such a levy, telling parenting website Mumsnet “that’s something I would look at” if energy companies were not reinvesting their profits in the UK.
On Tuesday he reiterated his threat in the House of Commons, but said the government does not believe a windfall tax is a simple answer to the problem.
Mr Sunak is under mounting pressure from business leaders, charities and MPs from across the political spectrum to produce a package of support after inflation hit a 40-year high, with food and energy costs among the main concerns.
He appeared to acknowledge the need for further support for the poorest in a speech on Wednesday night at the Confederation of British Industry’s (CBI) annual dinner. He said “right now, we also have a collective responsibility to help the most vulnerable in our society.”
“And so, as the situation evolves our response will evolve,” he added. “I have always been clear, we stand ready to do more.”
While Mr Sunak wants to be seen to do more to help struggling households, he is also wary of inflicting further damage on public finances, which have taken a serious battering from the Covid-19 pandemic.
The Bank of England has warned Britain’s economy could plunge into a recession before the end of the year. It has also forecast that inflation will rise above 10.25 per cent in the fourth quarter of this year — the highest level since 1982.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Tips to keep your car cool
- Place a sun reflector in your windshield when not driving
- Park in shaded or covered areas
- Add tint to windows
- Wrap your car to change the exterior colour
- Pick light interiors - choose colours such as beige and cream for seats and dashboard furniture
- Avoid leather interiors as these absorb more heat
Company name: Farmin
Date started: March 2019
Founder: Dr Ali Al Hammadi
Based: Abu Dhabi
Sector: AgriTech
Initial investment: None to date
Partners/Incubators: UAE Space Agency/Krypto Labs
PROFILE OF INVYGO
Started: 2018
Founders: Eslam Hussein and Pulkit Ganjoo
Based: Dubai
Sector: Transport
Size: 9 employees
Investment: $1,275,000
Investors: Class 5 Global, Equitrust, Gulf Islamic Investments, Kairos K50 and William Zeqiri
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
The bio
Job: Coder, website designer and chief executive, Trinet solutions
School: Year 8 pupil at Elite English School in Abu Hail, Deira
Role Models: Mark Zuckerberg and Elon Musk
Dream City: San Francisco
Hometown: Dubai
City of birth: Thiruvilla, Kerala
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
FIGHT CARD
Welterweight Mostafa Radi (PAL) v Tohir Zhuraev (TJK)
Catchweight 75kg Leandro Martins (BRA) v Anas Siraj Mounir (MAR)
Flyweight Corinne Laframboise (CAN) v Manon Fiorot (FRA)
Featherweight Ahmed Al Darmaki (UAE) v Bogdan Kirilenko (UZB)
Lightweight Izzedine Al Derabani (JOR) v Atabek Abdimitalipov (KYG)
Featherweight Yousef Al Housani (UAE) v Mohamed Arsharq Ali (SLA)
Catchweight 69kg Jung Han-gook (KOR) v Elias Boudegzdame (ALG)
Catchweight 71kg Usman Nurmagomedov (RUS) v Jerry Kvarnstrom (FIN)
Featherweight title Lee Do-gyeom (KOR) v Alexandru Chitoran (ROU)
Lightweight title Bruno Machado (BRA) v Mike Santiago (USA)
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