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Israel’s reported attack on a military base in Isfahan will probably be tolerated by Iran and is unlikely to provoke further direct retaliation, sources close to Tehran and experts told The National on Friday.
Tehran has played down the incident and Israel refrained from officially acknowledging it, suggesting both parties have chosen to return the conflict to the shadows.
“If the scenario of the Israeli response remains the same, then it means that the US administration has succeeded in containing the dangerous open confrontation,” a source close to Iran-backed militant groups in the Middle East said.
“Although the Israeli leaks are limited, they may indicate that the Israeli government has committed, at least until now, to the principle of the limited attack, which seems tolerable and won’t trigger a new round of confrontation.”
The military strike on Iranian territory came less than a week after Tehran's unprecedented rocket and drone barrage against Israel.
Two Israeli and three Iranian officials confirmed Friday's strike, The New York Times reported, while CNN reported a “senior US official” said Israel was behind the attack but the US played no role.
Iran's state news agency Irna quoted a military official in the central Iranian city of Isfahan, Brig Gen Mihan Dost, as saying loud noises heard east of the city were air defence systems intercepting what he called “suspicious targets” and that no damage was reported in the area.
The Fars news agency said “three explosions” were heard in the area of the Shekari military airbase near Isfahan, south of the capital Tehran and not far from Iran's largest nuclear research complex.
Iran attacked Israel last Saturday in retaliation for the Israeli strike on the Iranian consulate in Damascus on April 1. It was Tehran's first direct known attack against its regional foe and marked the start of a new chapter in confrontation between the two countries.
Israeli and allied air defence systems intercepted the vast majority of the drones and missiles fired last week. It caused minor damage in Israel, although a girl was reportedly wounded by shrapnel.
Nevertheless, Israel’s war cabinet, led by Prime Minister Benjamin Netanyahu, opted for retaliation that was intended to be “painful” to Iran, without sparking a full-blown war, according to Israeli media. An Iranian official then warned Tehran would retaliate “within seconds” against any Israeli attack.
“The region entered a new turning point since the attack on the Iranian embassy building in Damascus, but Israel’s focus is on Gaza and south of Lebanon,” said another source close to Iran’s backed militias. "They know it’s not the right timing for a direct war with Iran."
Sources close to Tehran this week told The National Iran was already gearing up to counter an Israeli retaliation, possibly within its borders, after Israel said it had decided to respond to last Saturday's barrage.
Iran's military and political leaders have determined a specific level of Israeli response that could be tolerable, even if on Iranian soil, without provoking severe retaliation from Tehran, the sources added.
The Isfahan attack was “an Israeli attempt to restore deterrence, but it's a weak and failed attack", said Kassem Kassir, a political analyst with insights into Iran-backed Hezbollah. "The Iranians are studying the situation to determine their stance.”
Israeli far-right National Security Minister Itamar Ben-Gvir posted one word on X – “lame” – after reports of the Israeli attack emerged.
Before the strike, debate was raging in Israel about how to respond to the unprecedented direct Iranian assault, with some ministers said to be furious that Mr Netanyahu had delayed retaliation.
Reports that a majority of ministers in Israel's government prefer strong retaliation have placed Mr Netanyahu on a collision course with crucial international allies, who launched a frantic effort this week to dissuade Israel from a large-scale attack on Iran, fearing it could lead to a regional war.
Political analyst Joseph Daher told The National Israel appears to have abided by limits imposed by the US to avoid further escalation.
US President Joe Biden, who is running for re-election in November, has been trying to prevent Israel's war in Gaza, which broke out on October 7, from spreading across the region.
"These attacks show a desire to prevent escalation into a regional conflict and to maintain a low level of intensity, which was maybe forced upon Israel by US pressure," Mr Daher said. "Each side displayed strength while preserving deterrence."
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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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
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