Israeli Foreign Minister Israel Katz, right, who is to become defence minister, welcomes French Foreign Minister Jean-Noel Barrot in Jerusalem. EPA
Israeli Foreign Minister Israel Katz, right, who is to become defence minister, welcomes French Foreign Minister Jean-Noel Barrot in Jerusalem. EPA
Israeli Foreign Minister Israel Katz, right, who is to become defence minister, welcomes French Foreign Minister Jean-Noel Barrot in Jerusalem. EPA
Israeli Foreign Minister Israel Katz, right, who is to become defence minister, welcomes French Foreign Minister Jean-Noel Barrot in Jerusalem. EPA

Diplomatic tension between France and Israel increases after gendarmes detained in Jerusalem


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Relations between France and Israel have been strained further after Israeli security forces in Jerusalem entered a holy site under French administration, briefly detaining two French officers with diplomatic status.

French Foreign Minister Jean-Noel Barrot was scheduled to visit the compound of the Church of the Pater Noster, on the Mount of Olives in the historic eastern part of the city, but cancelled in protest against the presence of Israeli police. The site, one of four administered by Paris in Jerusalem, is deemed part of France.

“The recent event seems to be a voluntary attempt on the part of the Netanyahu government to humiliate France as payback for Macron’s declaration that Israel was created by a UN resolution," Karim Bitar, professor of international relations at St Joseph University of Beirut, told The National.

President Emmanuel Macron's comments, which were leaked to the press mid-October after a cabinet meeting, caused a furore in Israel. The French leader then said at a conference to support Lebanon in Paris that civilisation cannot be defended by those who spread barbarity – a statement that was widely viewed as a direct attack on Israeli Prime Minister Benjamin Netanyahu.

Mr Barrot said Israel's actions on Thursday were unacceptable and that he refused to enter the compound. His ministry said the Israeli ambassador to Paris will be summoned in coming days.

“This violation of the integrity of a site under French responsibility risks undermining the ties I had come to nurture with Israel at a time when we all need to move forward the region on the path to peace,” Mr Barrot told reporters outside the building.

Israel's Foreign Ministry said in a statement that an argument broke out between Israeli security forces and two French security guards. They were released immediately after they identified themselves as diplomats, it said.

“It comes as a reminder to western public opinion that Israel violates international law on a daily basis not only when it comes to Palestinian rights but also does not hesitate to trample on other countries' sovereignty, even a major European power like France,” Mr Bitar said.

“Today, I would say that this latest incident will only deepen the faultline between Netanyahu and Macron.”

Visiting foreign leaders are accompanied by Israeli security personnel, which was “clarified in advance in the preparatory dialogue with the French embassy in Israel”, the ministry added.

French Foreign Ministry spokesman Christophe Lemoine said on Thursday that Mr Barrot was visiting Israel and Palestine as “part of a sequence marked by three trips by our minister to the region since taking office, with the aim of advancing peace and stability in the Near and Middle East region”.

“Today’s sequence aims to continue dialogue with Israel on Gaza, on Lebanon, and more generally on the situation in the Middle East, to continue our discussions with the Palestinian Authority, which is an essential partner for implementing the two-state solution, and to advance the parameters of a security and diplomatic settlement in Lebanon.”

Mr Barrot met Palestinian President Mahmoud Abbas on Thursday in the occupied West Bank city of Ramallah, where they discussed the end of war in Gaza and the actions of Israeli settlers in the West Bank. Mr Abbas also warned of the danger of Israel's decision to ban the work of the UN agency for Palestinian refugees (UNRWA), the Wafa news agency reported.

Diplomatic relations between France and Israel have worsened since Mr Macron called for an end to the supply to Israel of weapons used in Gaza. The French government also attempted to ban Israeli arms companies from exhibiting at a trade fair in Paris, with Paris increasingly uneasy over Israel's conduct in Gaza and Lebanon.

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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.

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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. 

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Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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Updated: November 09, 2024, 3:23 PM