US inflation rose last month due to rising petrol costs, but underlying inflationary measures showed signs of a cooling economy.
The Consumer Price Index (CPI) rose 0.6 per cent last month after increasing 0.2 per cent in July, and increased 3.7 per cent on an annual basis, the Labour Department reported on Wednesday, in line with economists' expectations.
Core CPI – which excludes gasoline and food – rose 0.3 per cent last month, slightly hotter than expectations of 0.2 per cent. Still, it cooled on an annual basis. Year-on-year, core CPI rose 4.3 per cent, down from 4.7 per cent in July.
The gasoline index accounted for more than half of the monthly all-items increase, the Labour Department reported. The average gas price in the US rose to $3.848 on Wednesday, according to motorgroup AAA.
The latest data also increases hopes that the Fed can achieve a so-called soft landing, in which economic growth slows without being driven into a recession.
Recent government reports show that the economy is also trending to where the Federal Reserve wants it to go, as inflation continues to cool and the labour market shows signs of softening.
While recent economic data has shown that inflation has eased in the US, it still remains at a too-high level for the Fed's long-term 2 per cent goal. Policymakers have indicated that they would likely keep rates elevated for some time.
The probability of the US economy slipping into recession has declined further, as encouraging inflation and job market trends bode well for the world's biggest economy, Goldman Sachs said in a report earlier this month.
The chances of an economic contraction in the US have dropped to 15 per cent over the 12-month period, down from a previous estimate of 20 per cent, according to the investment bank.
The US, the world's largest economy, is forecast to grow 1.8 per cent in 2023, instead of 1.6 per cent as previously projected by the International Monetary Fund. Its economy is projected to expand 1 per cent in 2024.
Traders largely anticipate that the Fed will leave interest rates unchanged when it meets next week. The central bank has raised US interest rates to the target range of 5.25 and 5.50 per cent since March of last year.
The Fed is not expected to cut interest rates until June 2024, data from the CME Group showed.
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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CHINESE GRAND PRIX STARTING GRID
1st row
Sebastian Vettel (Ferrari)
Kimi Raikkonen (Ferrari)
2nd row
Valtteri Bottas (Mercedes-GP)
Lewis Hamilton (Mercedes-GP)
3rd row
Max Verstappen (Red Bull Racing)
Daniel Ricciardo (Red Bull Racing)
4th row
Nico Hulkenberg (Renault)
Sergio Perez (Force India)
5th row
Carlos Sainz Jr (Renault)
Romain Grosjean (Haas)
6th row
Kevin Magnussen (Haas)
Esteban Ocon (Force India)
7th row
Fernando Alonso (McLaren)
Stoffel Vandoorne (McLaren)
8th row
Brendon Hartley (Toro Rosso)
Sergey Sirotkin (Williams)
9th row
Pierre Gasly (Toro Rosso)
Lance Stroll (Williams)
10th row
Charles Leclerc (Sauber)
arcus Ericsson (Sauber)
Fund-raising tips for start-ups
Develop an innovative business concept
Have the ability to differentiate yourself from competitors
Put in place a business continuity plan after Covid-19
Prepare for the worst-case scenario (further lockdowns, long wait for a vaccine, etc.)
Have enough cash to stay afloat for the next 12 to 18 months
Be creative and innovative to reduce expenses
Be prepared to use Covid-19 as an opportunity for your business
* Tips from Jassim Al Marzooqi and Walid Hanna
