The overall direct impact of new US tariffs remains contained in the Middle East and North Africa, despite potential negative effects of falling crude prices and decreased revenue for the region’s oil-exporting economies, S&P Global has said.
There are opportunities for increased trade and investment flows as well as improved local competitiveness due to a weaker US dollar, which could help in mitigating the negative impact of tariffs on the broader region, the ratings agency said in its latest market intelligence report.
“The adverse direct impact of US tariffs on the Mena region will be contained, but could be magnified by falling oil prices, or mitigated by indirect effects, such as increased trade and investment flows to Mena,” Ralf Wiegert, head of Mena Economics at S&P Global Market Intelligence, said.
The indirect impact of the higher US tariffs will probably vary between Mena economies as there are several different transmission channels involved, which could either “worsen the direct impact, partly compensate, or even turn the impact to net positive”, according to the S&P report.
Among the possible factors that can help some Mena sovereigns to tackle the impact of tariffs are “reduced energy subsidies and lower interest rates, particularly for countries like the UAE and Morocco”, the report added.
US President Donald Trump is delivering on his campaign promise of slapping tariffs on America's trading partners around the world, to balance its bilateral trade of goods and services. However, the hefty duties he is imposing on 57 trading partners have dented growth prospects of global trade.
US duties hit historic levels, before being paused earlier this month for 90 days, and have stocked fears of marked slowdown in the global economy as well as devastating effects on some of the least developed and developing economies.
Global equity markets have whipsawed, with crude prices seeing a sharp volatility, as Mr Trump’s push for tariffs has rattled investors.
A drop in crude prices in the wake of the tariff-driven economic slowdown and demand erosion will affect the oil-exporting economies of the Middle East, especially the six Gulf states, which account for a third of the world’s proven oil reserves.
Growth forecast revision
On Thursday, the International Monetary Fund said trade tension remains a key risk facing the region’s economic prospects.
The fund expects Mena economies to grow by an average of 2.6 per cent this year, down 1.3 percentage points from the previous estimate. Growth is expected to pick up to 3.4 per cent next year.
“Quite a downgrade,” IMF managing director Kristalina Georgieva said during a news briefing in Washington on Thursday.
The IMF has also cut its 2025 growth prospects for Saudi Arabia, the world's largest oil exporter, from 3.3 per cent to 3 per cent. The UAE economy is expected to grow by 4 per cent this year before expanding by 5 per cent in 2026.
The World Bank earlier this week also said that economic growth in the Mena region will be slower than previously anticipated amid prospects of a global trade war and lower oil revenue. It expects GDP of the wider region to expand 2.6 per cent, a downgrade of 1.3 percentage points from its October Mena forecast.
“Weaker oil prices are likely to force governments to revise their investment spending plans or increase borrowing plans, which will have knock-on effects on growth forecasts for oil exporting countries, including Saudi Arabia and the UAE,” S&P analysts said.
“Oil price risks could threaten financial stability in Iraq and require additional measures to rein in spending for Oman and Bahrain.”
Upside potential
However, the upside for Gulf economies will be the competitiveness of their local production, which will improve with the weaker US dollar relative to non-US dollar area producers, including the euro area, India, China, and Japan.
S&P analysts also expect tariff-driven “diversion effects for trade and investment flows in favour of Mena countries which could be a “key upside risk for several Mena markets”.
“US companies could seek to circumvent reciprocal tariffs from countries like China against the US and locate production or sales distribution centres in the Mena region,” S&P said.
“Places like the UAE, which have a well-developed trade and infrastructure network, could be prime beneficiaries for this development.”
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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Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Sholto Byrnes on Myanmar politics
COMPANY%20PROFILE
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Safety 'top priority' for rival hyperloop company
The chief operating officer of Hyperloop Transportation Technologies, Andres de Leon, said his company's hyperloop technology is “ready” and safe.
He said the company prioritised safety throughout its development and, last year, Munich Re, one of the world's largest reinsurance companies, announced it was ready to insure their technology.
“Our levitation, propulsion, and vacuum technology have all been developed [...] over several decades and have been deployed and tested at full scale,” he said in a statement to The National.
“Only once the system has been certified and approved will it move people,” he said.
HyperloopTT has begun designing and engineering processes for its Abu Dhabi projects and hopes to break ground soon.
With no delivery date yet announced, Mr de Leon said timelines had to be considered carefully, as government approval, permits, and regulations could create necessary delays.
MATCH INFO
Uefa Champions League last-16, second leg:
Real Madrid 1 (Asensio 70'), Ajax 4 (Ziyech 7', Neres 18', Tadic 62', Schone 72')
Ajax win 5-3 on aggregate
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
