Protesters in Tel Aviv hold signs critical of Benjamin Netanyahu while demanding the Israeli government take urgent steps to free hostages abducted on October 7. Reuters
Protesters in Tel Aviv hold signs critical of Benjamin Netanyahu while demanding the Israeli government take urgent steps to free hostages abducted on October 7. Reuters
Protesters in Tel Aviv hold signs critical of Benjamin Netanyahu while demanding the Israeli government take urgent steps to free hostages abducted on October 7. Reuters
Protesters in Tel Aviv hold signs critical of Benjamin Netanyahu while demanding the Israeli government take urgent steps to free hostages abducted on October 7. Reuters

Netanyahu's showdown with Biden aimed at domestic audience


Thomas Helm
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Live updates: Follow the latest news on Israel-Gaza

Israeli Prime Minister Benjamin Netanyahu is worsening a rift between himself and US President Joe Biden, as fears mount in Israel that the increasingly unpopular leader is willing to torpedo the country's relations with its closest ally in a bid to stay in power.

Relations between both countries hit a new low on Monday, after the US chose not to veto a UN Security Council resolution calling for an immediate ceasefire in the Gaza war.

After the resolution was passed, Mr Netanyahu announced that he was cancelling the visit of a high-level delegation to the White House.

Israel relies heavily on the US, by far its most supportive ally, for diplomatic cover and military aid.

Washington's decision to abstain at the UN is the clearest sign yet of the Biden administration’s anger at Mr Netanyahu over Israel’s conduct in Gaza. The enclave's humanitarian crisis is rapidly worsening and Israel continues to plan a potentially catastrophic incursion into the overcrowded city of Rafah.

The Israeli delegation's planned visit was personally requested by Mr Biden, who wanted to suggest alternative strategies to a Rafah operation.

“Mr Netanyahu’s coalition is under pressure. To try and redeem himself in the eyes of the Israeli public, he wants to show himself as the only one capable of standing up for Israel’s interests,” Anshel Pfeffer, a biographer of the Prime Minister, told The National.

“There’s no greater challenge for an Israeli prime minister than to stand up to Israel’s biggest ally, the US.

“Netanyahu is creating a false idea that either Israel goes ahead and destroys Hamas, or listens to the Americans. It’s a false paradigm, but it is difficult to explain why to the Israeli public right now, when everyone is still focused on the need to destroy Hamas.”

Mr Netanyahu insists an operation in Rafah is crucial to destroying Hamas and rescuing the estimated 130 Israeli hostages who remain in captivity. However, the plan faces intense US and international opposition amid concerns over the safety of more than a million displaced Palestinians who have sought refuge in the city.

Former Israeli deputy national security adviser Chuck Freilich said that if Mr Netanyahu continues his confrontational approach with Mr Biden, “it will be disastrous for Israel”.

“Five months ago we had the closest strategic co-operation in the history of the US-Israeli relationship and now we’re in a crisis.

The UN and aid agencies warn of critical food shortages in Gaza. AFP
The UN and aid agencies warn of critical food shortages in Gaza. AFP

“It’s not something that is just going to blow over, even if the immediate crisis ends tomorrow. There are long-term repercussions to this.”

Given the historic depth of the US-Israel relationship, Mr Biden has many options to exert pressure on Mr Netanyahu's government, Mr Freilich said.

These include refusing to veto a future UN resolution that is not “100 per cent declaratory” as was the case on Monday, reducing visits by American officials to Israel, and perhaps even limiting arms supplies.

“Supplies don’t have to be cut off entirely, but certain specific items that Israel wants could take longer to be approved on the US side,” Mr Freilich said.

The passage of the UN Security Council resolution is also viewed as a worrying blow to the legitimacy of Israel’s campaign in Gaza.

“The fact that Israel will likely not respect the decision strengthens the arguments against the country at the International Court of Justice and the International Criminal Court,” a Palestinian politician told The National.

“The resolution taken by the Security Council affects the negotiations on the hostage deal and gives Hamas hope that it will be able to reach a ceasefire thanks to international pressure – even without a deal.

“In addition, the resolution sends a message to the international community that Israel is more isolated than ever, and could later be a pretext for countries to take diplomatic measures against Israel or stop arms sales to Israel.”

Mr Netanyahu also faces mounting difficulties keeping his far-right coalition government together.

Ultra-Orthodox Israelis protest against compulsory military service, an issue that is set to strain Mr Netanyahu's coalition. Reuters
Ultra-Orthodox Israelis protest against compulsory military service, an issue that is set to strain Mr Netanyahu's coalition. Reuters

War cabinet minister Benny Gantz on Monday doubled down on his threat to leave the unity government if an agreement is not reached to end controversial military service exemptions for Israel’s ultra-Orthodox Jewish community.

Mr Netanyahu is also juggling an emotional argument over the possible terms of a hostage exchange with Hamas, as negotiations come to a head.

“If there’s a ceasefire or hostage release agreement, the terms could break the coalition, whether in the form of the far-right saying Israel is giving too many concessions to Hamas, or the more pragmatic wing of the government saying Israel is giving up on the chance to save the hostages,” Mr Pfeffer said.

While tension is high, Mr Freilich does not believe a government collapse is imminent.

“I don’t think there will be a change until there’s massive protests in the streets, which will pale in comparison to last year’s,” he said, referring to nationwide demonstrations last year against proposed judicial changes.

“I don’t know why it’s not happening. I thought it would have started a couple of months ago. Maybe people are still too caught up in the idea that it is wartime.”

Company profile

Date started: December 24, 2018

Founders: Omer Gurel, chief executive and co-founder and Edebali Sener, co-founder and chief technology officer

Based: Dubai Media City

Number of employees: 42 (34 in Dubai and a tech team of eight in Ankara, Turkey)

Sector: ConsumerTech and FinTech

Cashflow: Almost $1 million a year

Funding: Series A funding of $2.5m with Series B plans for May 2020

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

Company Profile
Company name: OneOrder

Started: October 2021

Founders: Tamer Amer and Karim Maurice

Based: Cairo, Egypt

Industry: technology, logistics

Investors: A15 and self-funded 

Updated: March 26, 2024, 2:15 PM