The electric bicycle revolution is profitable but not perfect


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China's biggest electric bicycle maker is Xinri, which is located in Wuxi in Jiangsu province, a town that produces 3.5 million e-bikes a year. At the 2008 Beijing Olympics, Xinri provided electric bicycles and an electric car for use by police at the landmark Bird's Nest stadium. The company had sales of more than 2 million units last year. Other market leaders include Jiangsu Yadea Technical Development Company, known as Yadea, which makes electric bicycles as well as scooters.

Luyuan Electric Vehicle Company, set up in Jinhua in the industrial province of Zhejiang in 1996, has 1,800 workers and its 12 production lines can produce up to 1 million bikes a year. Top-shelf e-bikes usually carry four lead-acid batteries, which weigh as much as 28kg. While electric bikes do not emit greenhouse gases, they are not totally environmentally friendly. Getting rid of old batteries properly is a problem and the government has introduced schemes intended to regulate their disposal. Encouraging companies to come up with cleaner, greener batteries is also an issue as the market is highly diversified and price competition is intense.

The state-backed research group Antaike estimated the production of e-bikes accounted for 26 per cent of China's refined lead consumption at 2.9 million tonnes in 2008, just behind the car sector, which accounted for 28.5 per cent. That amounts to 754,000 tonnes of refined lead used to make electric bicycles. China, the world's top refined lead consumer and producer, was expected to use 3.37 million tonnes of the metal last year, Antaike estimated.

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Founder: Jon Richards, founder and chief executive; Samer Chebab, co-founder and chief operating officer, and Jonathan Rawlings, co-founder and chief financial officer

Based: Media City, Dubai 

Sector: Financial services

Size: 120 employees

Investors: 2014: $500,000 in a seed round led by Mulverhill Associates; 2015: $3m in Series A funding led by STC Ventures (managed by Iris Capital), Wamda and Dubai Silicon Oasis Authority; 2019: $8m in Series B funding with the same investors as Series A along with Precinct Partners, Saned and Argo Ventures (the VC arm of multinational insurer Argo Group)

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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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COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners