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Israeli arms manufacturers recorded their highest revenue yet last year, leading the Middle East market with sales reaching unprecedented levels driven by operations in Gaza, a new study has shown.
Aggregate revenue of those companies increased 15 per cent annually to $13.6 billion last year, placing the country eighth worldwide in terms of total arms revenue share, the Stockholm International Peace Research Institute said in a report on Monday.
That is about a 2.2 per cent share of the $632 billion total revenue posted by arms makers last year, which is a 4.2 per cent year-on-year increase, Sipri said. Turkey was the only other country from the region to be represented on the list.
The Solna-based institute defines arms revenue as those generated from the sales of military goods and services to military customers domestically and abroad.
Israel's Elbit Systems, ranked 27th, posted an annual revenue increase of 14 per cent to $5.4 billion, after securing about $900 million from military-related domestic contracts between October and December last year.
Israel Aerospace Industries, at 34th, reported that last year was a record, with revenue up 15 per cent at $4.5 billion, while 42nd-ranked Rafael Advanced Defence Systems said revenue grew 16 per cent to $3.7 billion, as both companies boosted their production of arms and new systems for the country's military.
Israel Aerospace says it operates in varied markets globally while Rafael's customers include 20 Nato countries supported by 30 subsidiaries and joint ventures, according to their websites. Elbit has been awarded contracts by a number of countries.
“The biggest Middle Eastern arms producers in the Top 100 saw their arms revenue reach unprecedented heights in 2023 and the growth looks set to continue,” Diego da Silva, a senior researcher at Sipri and one of the report's authors, said.
In particular, aside from taking in record arms revenue last year, Israeli arms producers are booking many more orders as the war in Gaza, which had just entered its second year, rages on. The Sipri report did not take into account any potential effects from Israel's other conflicts with Iran and Lebanon, which began in April and October, respectively.
The US remained the world's top country for arms manufacturing, with 41 companies from the world's biggest economy combining to post $317 billion in revenue last year, which is a 2.5 per cent year-on-year increase, Sipri said. Industry major Lockheed Martin remained No 1, despite its revenue dropping 1.6 per cent – a third consecutive annual decline – to $60.8 billion.
That gave America a commanding 50 per cent market share, well ahead of second-placed China, whose arms industry revenue market share was at 16 per cent, comprising nine Chinese companies whose revenue inched up 0.7 per cent at $103 billion last year.
The UK was third with a 7.5 per cent market share, with seven companies in the top 100 combining to post $47.7 billion revenue. That is part of a broader 27 companies from Europe, whose revenue marginally rose 0.2 per cent to $199 billion, accounting for 21 per cent of the top 100's total.
France and Russia were next with a market share of 4 per cent each. The latter, in particular, only had two companies – Rostec and USC – but combined for a revenue of $25.5 billion last year, which was 40 per cent year-on-year increase, primarily due to Russia's war with Ukraine, which is nearing its third year in February.
The sharp overall rise in Russian companies’ arms revenue was attributed to increased production of various arms “as a response to the military’s changing demands since the start of the war in Ukraine”, Sipri said.
In Asia and Oceania, 23 companies in the top 100 posted a 5.7 per cent arms revenue annual growth to hit $136 billion, with South Korea and Japan leading. Military expenditure is considered a critical component especially for major economies to ensure their national security and influence in international matters.
Spending rose for the ninth straight year last year to hit a record $2.443 trillion, and across all the five geographical regions defined by Sipri for the first time since 2009, it said in an April report.
That rise is a “direct response to the global deterioration in peace and security”, as states continue to prioritise military strength, Nan Tian, a senior researcher at Sipri, had said.
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
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
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Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
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Company Fact Box
Company name/date started: Abwaab Technologies / September 2019
Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
Based: Amman, Jordan
Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
Stage: early-stage startup
Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.
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