US President Donald Trump, centre, cited New Delhi's continued purchases of Russian oil. Left, Indian Prime Minister Narendra Modi and, right, Russian President Vladimir Putin. AFP
US President Donald Trump, centre, cited New Delhi's continued purchases of Russian oil. Left, Indian Prime Minister Narendra Modi and, right, Russian President Vladimir Putin. AFP
US President Donald Trump, centre, cited New Delhi's continued purchases of Russian oil. Left, Indian Prime Minister Narendra Modi and, right, Russian President Vladimir Putin. AFP
US President Donald Trump, centre, cited New Delhi's continued purchases of Russian oil. Left, Indian Prime Minister Narendra Modi and, right, Russian President Vladimir Putin. AFP

As Trump hammers India with tariffs, is China next?


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US President Donald Trump implemented 50 per cent tariffs on select Indian goods on Wednesday, making them the highest imposed on an Asian country.

Mr Trump initially signed the executive order in early August, imposing an additional 25 per cent tariff on India over what the US says are the country's continued purchases of Russian oil.

The new tariffs took effect at 12.01am in Washington, doubling the rate on Indian imports to 50 per cent, among the steepest charges on US trading partners.

The order also threatens to punish other countries that are “directly or indirectly importing Russian Federation oil”.

Mr Trump has ramped up his rhetoric in recent weeks over Russia's invasion of Ukraine. On Monday, he threatened to punish India for purchasing Russian oil, a key source of revenue for Moscow. Last month, he also threatened to place a 100 per cent tariff on countries that import Russian oil if Moscow did not end the war.

A representative for India's Ministry of External Affairs said New Delhi has made clear to Washington that its imports are based on market factors to ensure energy security for its residents.

“It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest,” the representative said in a statement. “We reiterate that these actions are unfair, unjustified and unreasonable.”

India's national security adviser was due to visit Russia this week amid the increased tension between Washington and New Delhi, Russian and Indian media reported. The visit coincided with US special envoy Steve Witkoff's trip to Moscow, where he held talks with Russian President Vladimir Putin on Ukraine.

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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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Updated: August 27, 2025, 9:37 AM