The UAE is to invest $40 billion in key sectors of Italy’s economy as the two countries strengthen ties.
Italy and the UAE signed over 40 new agreements covering sectors including economy and investment, defence, energy and space during President Sheikh Mohamed's state visit to Rome on Monday.
Connectivity, infrastructure, high-tech industry, artificial intelligence, water technology, information and communication technology, SMEs and start-ups, agriculture, civil aviation, education, culture and health care were the other areas of mutual interest for the two countries, Emirati state news agency Wam reported on Monday.
The two countries are also aiming to explore opportunities for co-operation with other partners, particularly in Africa.
The announcements came as the two countries continue to bolster their trade ties, with non-oil trade reaching $11.7 billion in 2023. Italy has increased investment in the UAE by 50 per cent in the last five years.
Sheikh Mohamed held talks with Italy’s Prime Minister Giorgia Meloni on Monday and the two leaders discussed the UAE's goal of enhancing its presence in European markets with Italy’s support, particularly by “pursuing negotiations for market liberalisation through a Comprehensive Economic Partnership Agreement [Cepa], a bilateral free trade agreement, with the European Union", Wam reported, citing a joint statement issued by the two countries.
Cepas are playing a key part in boosting the UAE's non-oil foreign trade, which hit a record Dh3 trillion ($816.7 billion) last year − up 14.6 per cent year-on-year.
The two countries also highlighted Italy’s and the UAE’s roles as logistic hubs and stepping stones in global connectivity, strengthening trade and investment ties between Europe and Asia.
“This collaboration underscores the importance of Italy and the UAE as strategic partners for innovation, sustainable economic development and technological exchange, fostering deeper ties between Europe, the Middle East and Asia, also in the framework of IMEC [The India-Middle-East-Europe Economic Corridor],” the statement said.
The IMEC announced during the G20 summit in 2023, consists of an eastern route connecting India to the Gulf and a northern pathway connecting the Gulf to Europe.
The cross-border, ship-to-rail transit corridors are expected to reduce shipping costs across the network and support trade in goods and services to, from and between the UAE, Saudi Arabia, India and Europe.
The UAE, Italy and Albania last month announced a partnership to build a subsea interconnector for exporting renewable energy across the Adriatic Sea.
As part of the deal, green power produced in Albania will be exported to Italy through an undersea cable, Italian Prime Minister Giorgia Meloni told the World Future Energy Summit in Abu Dhabi in January.
Also on Monday, Abu Dhabi sovereign investor ADQ signed an initial agreement with Rome-based energy company Eni to identify potential strategic areas of co-operation aimed at strengthening supply chains for critical minerals.
The collaboration will prioritise potential investment in regions such as Africa, North America and Central Asia. They will explore synergies across the entire critical and strategic minerals value chain, from mining to refining, processing and downstream applications, the companies said.
The companies will also assess the feasibility of establishing refining and processing facilities in the UAE and Italy.
COMPANY PROFILE
Company name: SimpliFi
Started: August 2021
Founder: Ali Sattar
Based: UAE
Industry: Finance, technology
Investors: 4DX, Rally Cap, Raed, Global Founders, Sukna and individuals
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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