Taliban co-founder Abdul Ghani Baradar and Chinese Foreign Minister Wang Yi pose for a photo during their meeting in Tianjin, China, last month. Image: AP
Taliban co-founder Abdul Ghani Baradar and Chinese Foreign Minister Wang Yi pose for a photo during their meeting in Tianjin, China, last month. Image: AP
Taliban co-founder Abdul Ghani Baradar and Chinese Foreign Minister Wang Yi pose for a photo during their meeting in Tianjin, China, last month. Image: AP
Much has already been written about the abrupt Taliban takeover of Afghanistan and the loss of political capital for western nations.
What is becoming clearer is that China in particular has an opportunity amid the US withdrawal from Afghanistan to make further progress on its long-term goal of being the main strategic partner for Asian countries.
China has moved quickly and its Foreign Minister Wang Yi met the Taliban’s co-founder, Abdul Ghani Baradar, in Tianjin at the end of last month. Mr Baradar said the Taliban could return to Kabul and regain power in 20-30 days. The rest is history.
To keep China on side, it would seem that Mr Baradar agreed at the Tianjin meeting that Afghanistan would join China’s Belt and Road Initiative once the Taliban regained control of the country.
Furthermore, Kabul will seek to become a full member of the Shanghai Co-operation Organisation as soon as possible, as Afghanistan draws fully into China’s orbit.
Any new government in Kabul is already facing financial problems as the International Monetary Fund (IMF) has said Afghanistan will no longer be able to access the lender's resources, with a spokesperson saying it was due to "lack of clarity within the international community".
Resources of over $370 million (£268m) from the IMF had been set to arrive on August 23. These funds were part of a global IMF response to the economic crisis.
Access to the IMF's reserves in Special Drawing Rights (SDR) assets, which can be converted to government-backed money, has also been blocked.
SDRs are the IMF's unit of exchange based on sterling, dollars, euros, yen and Yuan. The Chinese, with their substantial foreign exchange reserves, are sure to fill a temporary gap in the Taliban’s finances until the rest of the world grudgingly recognise facts on the ground and begin to re-engage with the Taliban administration.
Besides Afghanistan, the Chinese have already set out their grand economic vision, under the Belt and Road initiative, to draw many countries in Asia and the Middle East.
The ill-conceived US withdrawal has set alarm bells ringing in many of these countries over whether, unlike the Chinese, any Washington administration has the long term staying power and commitment to its allies.
Mr Wang Yi took a six-country tour of the Middle East in March, visiting Saudi Arabia, Turkey, Iran, the UAE, Oman and Bahrain.
Arab-Chinese relations are growing stronger and the two sides are working on arranging the next event of the triennial China-Arab Summit, as agreed at the ministerial meeting of the China-Arab States Cooperation Forum last year.
The summit is due to be hosted in the Middle East this time. This will presumably bring Chinese President Xi Jinping to the region for the first time since 2018, when he visited Abu Dhabi.
China is also hoping to push forward talks on a free-trade agreement with the Gulf Co-operation Council. All six countries Wang visited have signed on to China’s Belt and Road Initiative, along with Iraq, Kuwait, Lebanon, Qatar, and Yemen.
China’s Belt and Road Initiative is a multitrillion-dollar infrastructure scheme launched in 2013 by President Xi involving development and investment initiatives that would stretch from East Asia to Europe.
The project is designed to significantly expand China’s economic and political influence. More than 100 countries have signed agreements with China to co-operate in BRI projects like railways, ports, highways and other infrastructure.
According to a Refinitiv database, as of mid-last year, more than 2,600 projects at a cost of $3.7 trillion were linked to the initiative.
However, China said last year that about 20 per cent of BRI projects had been “seriously affected” by the coronavirus pandemic. There has also been pushback against BRI from some countries, which have criticised projects as costly and unnecessary.
But the temptation to copy others is always there and the US seems to have caught the bug of China’s BRI scheme.
US President Joe Biden said he suggested to British Prime Minister Boris Johnson in a phone call in March that democratic countries should have an infrastructure plan to rival China’s Belt and Road initiative.
The US has launched a new development finance institution to compete with China. Providing developing countries with more financing sources by itself will probably not change the picture very much, given the lessons of Afghanistan.
Developing countries have various funding sources already, and they prefer to use Chinese financing for big projects in transport and power for specific reasons. Private funding is too expensive and short-term (usually a maximum five years).
Western donors and their multilateral banks give grants or lend on extraordinarily generous terms. But these traditional donors prefer to finance social services, administration and democracy-promotion, as was the case in Afghanistan.
These efforts seemed to evaporate overnight with the Taliban takeover.
The westerners omitted hard infrastructure almost completely, providing the Chinese BRI an open field with visible projects.
Dr Mohamed Ramady is a former senior banker and Professor of Finance and Economics, King Fahd University of Petroleum and Minerals, Dhahran.
Starring: Paul Rudd, Carrie Coon, Finn Wolfhard, Mckenna Grace
Rating: 2/5
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Nicki Minaj
(Young Money/Cash Money)
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
World Cricket League Division 2
In Windhoek, Namibia - Top two teams qualify for the World Cup Qualifier in Zimbabwe, which starts on March 4.
UAE fixtures
Thursday February 8, v Kenya; Friday February 9, v Canada; Sunday February 11, v Nepal; Monday February 12, v Oman; Wednesday February 14, v Namibia; Thursday February 15, final
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
ORDER OF PLAY ON SHOW COURTS
Centre Court - 4pm (UAE)
Gael Monfils (15) v Kyle Edmund
Karolina Pliskova (3) v Magdalena Rybarikova
Dusan Lajovic v Roger Federer (3)
Court 1 - 4pm
Adam Pavlasek v Novak Djokovic (2)
Dominic Thiem (8) v Gilles Simon
Angelique Kerber (1) v Kirsten Flipkens
Court 2 - 2.30pm
Grigor Dimitrov (13) v Marcos Baghdatis
Agnieszka Radwanska (9) v Christina McHale
Milos Raonic (6) v Mikhail Youzhny
Tsvetana Pironkova v Caroline Wozniacki (5)
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.”
