Second-quarter debt issuance spikes in UAE

The UAE led a surge in Arabian Gulf US-denominated international debt issuances during the second quarter, as low oil prices prompted governments to turn to bond markets to plug budget deficits.

The UAE issued $14.4 billion in the second quarter, Qatar $9bn and Oman $5bn, according to a report published yesterday from the Bank for International Settlements.

The Middle East accounted for almost a third of all issuances from emerging markets during the period, the bank said.

“With a lower oil price, more UAE names need to fund themselves externally and are going to the bond market to do so,” said Andy Cairns, global head of debt origination & distribution at National Bank of Abu Dhabi.

“As US interest rates remain historically low, now is a good time to lock in cheap borrowing,” he said.

Mr Cairns said it was likely that debt issuances in the region would increase as long as oil prices remained depressed.

The Bank for International Settlements did not give year-on-year comparative figures, but graphs it provided indicated that it was much higher than the past couple of years.

The emirate of Abu Dhabi has been among the biggest single sellers of international bonds this year from the UAE. In April, it sold $5bn in sovereign bonds for the first time since 2009.

Abu Dhabi’s department of finance sold a $2.5bn tranche of five-year bonds yielding 2.125 per cent which mature on May 3, 2021, and another $2.5bn tranche of 10-year bonds yielding 3.125 per cent that mature on May 3, 2026.

UAE government-related entities are also said to be exploring finance options from international lenders as sources of funding at home become more expensive amid tightening liquidity in banks.

The price of crude has dropped by as much as 70 per cent from its high in the middle of 2014.

mkassem@thenational.ae

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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

Second-quarter debt issuance spikes in UAE

The UAE led the region in international US dollar-denominated debt issuances during the second quarter.

Zayed Sustainability Prize

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Ten tax points to be aware of in 2026