Increased UAE-Israel co-operation to help SMEs, minister says

The UAE’s Minister of State for Entrepreneurship and SMEs said small and medium-sized enterprises will benefit from the move to normalise relations with Israel, helping to increase their contribution to the UAE’s economy.

Ahmad Belhoul Al Falasi told a webinar organised by Google this week that he also expects more Israeli start-ups to set up in the UAE.

“The implementation of a slew of measures and initiatives at both federal and local levels is further enhancing the openness of the UAE economy … presenting a golden opportunity for the Israeli business community to take advantage of the numerous economic prospects that are being generated,” he said.

The SME sector contributed 53 per cent of the UAE’s gross domestic product in 2019, up from 49 per cent in 2018.

“Through the efforts we have currently undertaken, we strive to increase [the] SME sector’s contribution to 60 per cent by 2021.”

A number of pacts have been signed between the UAE and Israel to foster co-operation in sectors ranging from aviation to finance after they signed the Abraham Accord in September.

The annual exchange of trade between the two countries is expected to reach $4 billion a year, according to Etihad Credit Insurance.

Google’s webinar brought together policy-makers and technology leaders from the two countries to build upon the ongoing dialogue between the UAE and Israeli tech ecosystems.

The signing of the Abraham Accords presents huge opportunities to tech entrepreneurs in both the UAE and Israel, Meir Brand, vice president of Google for emerging markets in Europe, Middle East and Africa, said.

“We intend to help support the tech industries in the UAE, Israel and across the region, enabling entrepreneurs and businesses to reach new customers, access new markets and … to be a growth engine for national and regional economies," said Mr Brand.

The webinar brought together policy-makers and technology leaders from the UAE and Israel on the same platform.

“There are a lot of learnings for us from the Israeli ecosystem, particularly in the development of strong technical talents and attracting international capital in significant ways,” said Mahmoud Adi, co-founder and director of Abu Dhabi-based start-up Pure Harvest Smart Farms.

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

Increased UAE-Israel co-operation to help SMEs, minister says

Ahmad Belhoul Al Falasi said he expects more Israeli start-ups to set up in the UAE

Ten tax points to be aware of in 2026