Saudi Arabia agreed to purchase Turkish drones on Tuesday in Ankara's largest defence contract as Turkish President Recep Tayyip Erdogan continues his three-day tour of the Gulf.
Mr Erdogan and Saudi Crown Prince Mohammed bin Salman attended the signing ceremony between Turkish defence firm Baykar and Riyadh's defence ministry, Saudi state news agency SPA reported.
Saudi Arabia will acquire the drones “with the aim of enhancing the readiness of the kingdom's armed forces and bolstering its defence and manufacturing capabilities,” Defence Minister Prince Khalid bin Salman said.
It comes as the long-time president seeks to shore up regional alliances and bolster Turkey's failing economy following his second-round victory in May's general elections.
Baykar chief executive Haluk Bayraktar said it was the biggest defence and aviation export contract in Turkey's history.
The Akinci drones will be used in the air and navy forces of Saudi Arabia, Baykar said, without sharing more details.
Mr Erdogan has placed investment as the top priority of his trip to the Gulf, telling reporters Ankara has a “serious investment opportunity” in the UAE, Saudi Arabia and Qatar.
Turkey and Saudi Arabia signed several other bilateral agreements, Spa reported, including deals on energy, real estate and direct investment.
In Jeddah, Prince Mohammed test-drove an electric car with the Turkish President on Monday.
The two leaders tested the Togg model, Turkey's first electric car brand, in the courtyard of Al Salam Royal Palace in Jeddah, Turkey's Anadolu news agency reported.
Mr Erdogan will travel to Doha on Tuesday evening before arriving in Abu Dhabi on Wednesday, where he will hold talks with President Sheikh Mohamed.
Warming relations with Gulf states has provided a much-needed boost to the Turkish economy, which has continued to slump despite Mr Erdogan's victory.
The UAE and Turkey signed a trade deal potentially worth $40 billion over the next five years following his re-election in May.
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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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