China hears the voice of discontent

People power seems to finally be having an effect in the world's second-biggest economy.

China's decade-long property boom has been built on a nationwide land grab that has seen millions of farmers kicked off their land with little or no compensation. Despite their protestations, leaders have traditionally turned a deaf ear. Local governments are the main beneficiaries. Last year, they racked up a cool 1 trillion yuan(Dh591.37bn) in net land sales - equal to about 10 per cent of total revenue.

Property developers also benefit from an abundant supply and low prices for land, driving breakneck profit growth. China Overseas Land & Investment, one of China's largest developers by revenue, boasted a net margin of 30.4 per cent last year and others are not far behind.

But the ground is shifting. China's State Council has approved a change in land laws. Details are scanty and the amendment has to be approved by the National People's Congress in March. But the direction of change is toward raising compensation closer to the market value of the land.

The main winners are China's 650 million farmers. Since the late 1990s, 43.1 per cent of villages had experienced land grabs, with compensation a fraction of market values, according to rural policy expert Landesa.

The rule change could also help China's economy achieve a better balance. Artificially cheap land has meant supernormal profits for the construction industry, which tilted China's economy too far toward investment as a driver of growth. Higher compensation for farmers could boost consumption and reduce the incentive to pour more concrete.

Local governments, though, will have to find a new source of revenue to replace land sales. Some 2.5tn yuan they borrowed to pay for stimulus projects in 2009 was backed by the promise of land sales. A nationwide rollout of the property tax - currently piloted in Shanghai and Chongqing - is one possibility to help to plug the gap.

Implementation of the new law could be tough. Farmers have no voice in the policy process and are often only dimly aware of their legal rights.

* Dow Jones

Price, base / as tested From Dh173,775 (base model)
Engine 2.0-litre 4cyl turbo, AWD
Power 249hp at 5,500rpm
Torque 365Nm at 1,300-4,500rpm
Gearbox Nine-speed auto
Fuel economy, combined 7.9L/100km

Profile

Co-founders of the company: Vilhelm Hedberg and Ravi Bhusari

Launch year: In 2016 ekar launched and signed an agreement with Etihad Airways in Abu Dhabi. In January 2017 ekar launched in Dubai in a partnership with the RTA.

Number of employees: Over 50

Financing stage: Series B currently being finalised

Investors: Series A - Audacia Capital

Sector of operation: Transport

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

Saudi Cup race day

Schedule in UAE time

5pm: Mohamed Yousuf Naghi Motors Cup (Turf), 5.35pm: 1351 Cup (T), 6.10pm: Longines Turf Handicap (T), 6.45pm: Obaiya Arabian Classic for Purebred Arabians (Dirt), 7.30pm: Jockey Club Handicap (D), 8.10pm: Samba Saudi Derby (D), 8.50pm: Saudia Sprint (D), 9.40pm: Saudi Cup (D)