The UAE's first dirham-denominated treasury bond was listed on Nasdaq Dubai on Thursday, after the Dh1.5 billion ($408 million) issuance was oversubscribed 6.3 times and received bids worth Dh9.4bn amid strong demand from regional and global investors in the first auction this week.
Mohamed Al Hussaini, Minister of State for Financial Affairs, rang the market-opening bell at the exchange to celebrate the listing and circulation of the T-bond issued by the UAE federal government acting through the Ministry of Finance, state news agency Wam reported.
The Emirates last month announced the launch of a T-bonds issuance programme, for 2022 with a benchmark size of Dh1.5bn, as part of plans to build a local currency bond market and diversify its financial resources.
The ministry plans to issue six treasury bond tranches this year with a total value of Dh9bn, with the value of the tranches (two-year and three-year) in the first auction amounting to Dh1.5bn, with a fixed coupon rate of 3.01 per cent and 3.24 per cent, respectively.
Other tranches will be issued with various tenures for up to five years at later dates throughout the year.
“The Federal Treasury Bond Programme contributes to revitalising the local financial and banking sector and providing alternative financing opportunities for investors, reflecting the strength of economic development indicators, the stability of the financial system and the economy's resilience,” Mr Al Hussaini said.
“The national economy will continue its momentum and leadership during the next phase in the context of transitioning to the new economic model within the UAE 50 economic plan, in which the UAE establishes a diversified knowledge-based economy on innovation, entrepreneurship and advanced industries.”
T-bonds are fixed-rate government debt securities that pay semi-annual interest payments until maturity, online financial encyclopaedia Investopedia said. They are also considered to be relatively risk-free.
The success of the first issuance emphasises the UAE's creditworthiness as one of the world's most competitive and highly advanced economies, and its position as an investment destination for investors and entrepreneurs, Mr Al Hussaini said.
The UAE raised $4bn in October through the issuance of multi-tranche sovereign bonds, marking the first time it had issued bonds at the federal level.
Listed on Nasdaq Dubai, the US dollar-denominated bond package included conventional medium- and long-term 10- and 20-year tranches, as well as 40-year dual-listed Formosa bonds, the Ministry of Finance said at the time.
The latest T-bond listing increases the value of domestic and international fixed income listings on Nasdaq Dubai to $102bn, the Wam report said.
“The second bond listing from the UAE federal government underscores the government's confidence in Nasdaq Dubai's comprehensive infrastructure … for the issuance and listing of fixed income instruments from sovereign and commercial issuers in the UAE and globally,” said Hamed Ali, chief executive of Nasdaq Dubai.
Six agent banks have been appointed by the Ministry of Finance as primary dealers for participants in the market auction of the T-bonds and to actively develop the secondary market.
They include Abu Dhabi Commercial Bank, Emirates NBD, First Abu Dhabi Bank, HSBC, Mashreq Bank and Standard Chartered.
Company profile
Name: Back to Games and Boardgame Space
Started: Back to Games (2015); Boardgame Space (Mark Azzam became co-founder in 2017)
Founder: Back to Games (Mr Azzam); Boardgame Space (Mr Azzam and Feras Al Bastaki)
Based: Dubai and Abu Dhabi
Industry: Back to Games (retail); Boardgame Space (wholesale and distribution)
Funding: Back to Games: self-funded by Mr Azzam with Dh1.3 million; Mr Azzam invested Dh250,000 in Boardgame Space
Growth: Back to Games: from 300 products in 2015 to 7,000 in 2019; Boardgame Space: from 34 games in 2017 to 3,500 in 2019
UAE - India ties
The UAE is India’s third-largest trade partner after the US and China
Annual bilateral trade between India and the UAE has crossed US$ 60 billion
The UAE is the fourth-largest exporter of crude oil for India
Indians comprise the largest community with 3.3 million residents in the UAE
Indian Prime Minister Narendra Modi first visited the UAE in August 2015
His visit on August 23-24 will be the third in four years
Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, visited India in February 2016
Sheikh Mohamed was the chief guest at India’s Republic Day celebrations in January 2017
Modi will visit Bahrain on August 24-25
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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The biog
Job: Fitness entrepreneur, body-builder and trainer
Favourite superhero: Batman
Favourite quote: We must become the change we want to see, by Mahatma Gandhi.
Favourite car: Lamborghini
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