An undelivered Airbus A350 built for Qatar Airways is seen in storage at Chateauroux, France in September as Airbus and the Gulf carrier remain locked in a contractual and safety dispute. Reuters
An undelivered Airbus A350 built for Qatar Airways is seen in storage at Chateauroux, France in September as Airbus and the Gulf carrier remain locked in a contractual and safety dispute. Reuters
An undelivered Airbus A350 built for Qatar Airways is seen in storage at Chateauroux, France in September as Airbus and the Gulf carrier remain locked in a contractual and safety dispute. Reuters
An undelivered Airbus A350 built for Qatar Airways is seen in storage at Chateauroux, France in September as Airbus and the Gulf carrier remain locked in a contractual and safety dispute. Reuters

Qatar Airways and Airbus A350 saga continues in London court


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Airbus and Qatar Airways return to court on Friday as a contractual and safety dispute over A350 passenger jets descends into a tug-of-war over confidential documents, while the sums at stake in their unprecedented dispute top $1.5 billion.

Qatar Airways is suing Airbus over damage to the painted surface and anti-lightning system on A350 jets, saying safety could be at risk from a design defect. Airbus acknowledges quality flaws but denies the design is at fault and insists the jets are safe.

The two sides must provide each other with thousands of pages of documents as their row — which has already altered the shape of competition in the jet market — heads towards a rare London aerospace trial in mid-2023, barring a settlement.

The case has shed a rare public spotlight on the inner workings of the global jet market, including contractual details and the industrial playbook for preparing delivery of new jets.

Friday's High Court hearing is expected to hear mutual claims of foot-dragging over the release of documents including maintenance files and engineering analysis, as well as the return of millions of dollars of deposits and Airbus credits.

The number of A350s grounded by Qatar because of surface damage has risen to 28 out of 53 in its fleet.

Airbus said last month it had revoked all 19 remaining A350 orders from Qatar Airways, severing outstanding business with the Gulf carrier for new jets.

Boeing is meanwhile being dragged into the public dispute between its arch rival and one of its own biggest clients for the first time, sources say.

The dispute over the A350 widened earlier this year when Airbus revoked a separate contract for 50 smaller A321neo jets, arguing the contracts were linked by a cross-default clause.

Surface damage on a Qatar Airways' Airbus A350, parked at its aircraft maintenance hangar in Doha. Reuters
Surface damage on a Qatar Airways' Airbus A350, parked at its aircraft maintenance hangar in Doha. Reuters

Qatar subsequently ordered the Boeing 737 MAX and this catapulted arguments over the relative merits of the jets into court, with Airbus saying the MAX was as good as the A321 in a bid to avoid being forced to build the jets for Qatar.

Now the airline has been ordered to hand over a preliminary version of the MAX contract to Airbus with restrictions, but Boeing objects to elements of the rare disclosure, sources said.

Boeing has declined to comment.

The case's UK judge has called for a clear-the-air meeting between Airbus, the airline and Qatari and European regulators, but there are no signs so far of this happening.

Under aviation rules companies usually talk to their own regulators who then discuss safety with each other, but the case has highlighted a breakdown in the usual system of goodwill.

Airbus and Qatar Airways both declined to comment before Friday's hearing.

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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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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Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

The biog

Birthday: February 22, 1956

Born: Madahha near Chittagong, Bangladesh

Arrived in UAE: 1978

Exercise: At least one hour a day on the Corniche, from 5.30-6am and 7pm to 8pm.

Favourite place in Abu Dhabi? “Everywhere. Wherever you go, you can relax.”

Updated: October 14, 2022, 11:42 AM