UAE issues licence for electric cargo aircraft amid shift to eco-friendly transport

The UAE Regulations Lab has issued a licence for electric cargo aircraft as the country seeks to accelerate the shift towards eco-friendly transport and enhance the sustainability of the air cargo industry.

This licence was issued in collaboration with logistics company United Parcel Service to test electric vertical take-off and landing aircraft in the UAE, said a statement from the Government Media Office on Tuesday.

It will “contribute to reducing the carbon footprint by encouraging the adoption of clean energy and harnessing the potential of technology and innovation in redefining the future of the logistics sector and its impact on the environment and climate”, the media office said.

The licence also provides a strong legislative structure to operate a new generation of cargo aircraft that use clean energy, it added.

“The UAE is keen to adopt international best practices and advanced technologies in the air cargo industry,” Abdulla bin Touq, Minister of Economy and chairman of the General Civil Aviation Authority, said.

“Our country has become one of the most developed countries in the efficiency of air cargo operations. The application of the electric air cargo system will impact this sector positively, in accordance with the best standards of sustainability.”

The global all-electric aircraft sector is expected to grow by 14 per cent to about $20 billion by 2030, up from $6 billion in 2021, a study last year by Dublin-based consultancy Research and Markets found.

Industry stakeholders are developing core aircraft components and adopting technologies to transition the sector into a more sustainable means of air transport and cut carbon emissions, the study said.

Air taxis will begin flying in Dubai within three years, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said during the World Government Summit in Dubai last month.

Sheikh Mohammed added that he had approved designs for air taxi stations.

The RegLab, launched in 2019, seeks to “align regulation speed with innovation speed” by facilitating the development of regulations that keep pace with developments in sectors such as mobility, health, 3D printing technologies and artificial intelligence, the media office said.

Its latest aircraft licence will “provide the legal provision on a temporary basis to advance the UAE’s journey towards net zero emissions by 2050”, Mr bin Touq said.

The UAE is seeking to increase investments in the eco-friendly air transport sector and enhance its contribution to the country’s gross domestic product, the minister added.

Under the licence, UPS will be able to start its cargo operations through a new sustainable aircraft that conforms to the specifications and standards adopted internationally in the electric air cargo and transport system.

The GCAA possesses the capabilities and the necessary legislation to provide a safe operating environment for electric cargo aircraft through the issuance of regulations concerned with licensing runways for electric aircraft, as well as those related to airworthiness and operation, its director general Saif Al Suwaidi said.

While the entry of electric cargo flights could lead to congestion of airspace, this will also provide ease and flexibility of movement, lower noise and operate on clean energy, he said.

UPS has committed to 100 per cent carbon neutrality by 2050. The company will source 30 per cent of its aviation fuel from sustainable sources by 2035.

Dubai's first flying taxi stations - in pictures

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

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

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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