Former Dutch prime minister Mark Rutte, left, will succeed Nato Secretary General Jens Stoltenberg. EPA
Former Dutch prime minister Mark Rutte, left, will succeed Nato Secretary General Jens Stoltenberg. EPA
Former Dutch prime minister Mark Rutte, left, will succeed Nato Secretary General Jens Stoltenberg. EPA
Former Dutch prime minister Mark Rutte, left, will succeed Nato Secretary General Jens Stoltenberg. EPA

Arab states to play important role in Nato summit in Washington


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World leaders are gathering for a crucial Nato summit this week in Washington, where the defence alliance will look to increase co-operation with Middle East partners to help counter Iran and its deepening military ties to Russia.

Dozens of non-member partners including the UAE, Saudi Arabia, Bahrain, Jordan and Israel have been invited to join the talks as Nato marks its 75th anniversary in a fast-changing world whose power balances have shifted since its creation in 1949.

Russia's war in Ukraine will probably be front and centre of discussions, and Nato is working to engage countries across a much broader region as it highlights the bonds between Moscow and Tehran.

Jonathan Panikoff, director of the Scowcroft Middle East Security Initiative at the Atlantic Council’s Middle East Programme, said Nato members would be highlighting “the Russia issue”.

I don't think the situation in Gaza will feature prominently in these talks, if Nato can avoid it. There's plenty of other issues... missile defence, the Iranian threat
Luke Coffey,
Hudson Institute

“That obviously involves Iran predominantly more than any other challenge in the Middle East and Iran's provisions of drones and other weapons to Russia,” he said.

The expert said Nato considers Middle East states, many of which maintain strong ties with Russia and China, to be vital in opposing the matter.

“It's an opportunity to try and demonstrate … greater unity and harmony in the face of efforts by China and Russia to push against the traditional liberal international order,” Mr Panikoff said.

A senior US official said that during the summit, the US and allies will make "significant" new announcements on increasing military funding for Ukraine, as part of a "bridge" to Nato membership.

"The United States will also announce new steps to strengthen Ukraine's air defenses and military capabilities, to help Ukraine continue to defend themselves today and to deter Russian aggression into the future," the US official told journalists on a call on Friday.

"Allies will reaffirm that Ukraine's future is in Nato."

Iran has been providing Russia with Shahed-type drones that have been pounding Ukrainian cities and front lines.

One ideal for Nato would be getting Arab countries and Israel, which has been hesitant to support Ukraine, to sign a joint statement with the alliance on the need to respect Ukrainian sovereignty and for Russia to withdraw.

“I'm sceptical you'd be able to get that far,” Mr Panikoff said.

Although representatives from Arab countries and Israel will attend the summit, which runs from Tuesday to Thursday, the war in Gaza might not be a key area of discussion, experts said.

“I don't think the situation in Gaza will feature prominently in these talks if Nato can avoid it,” said Luke Coffey, a senior fellow at the Hudson Institute.

“Nato wants to maintain its focus on the institutional relationship between the alliance and these Arab states that are attending this because, as an intergovernmental security alliance, Nato has to find consensus on these big issues.

"Frankly, there's plenty of other issues of concern that Nato and Gulf states can discuss [such as] missile defence, the Iranian threat.”

Imad Harb, director of research and analysis at the Arab Centre in Washington, said he thought Arab countries would push for Nato to pressure Israel into a ceasefire in Gaza.

“Whether they get anywhere is a different story, because the most powerful nation on Earth, the United States, has not yet really committed itself to forcing Israel to go for a ceasefire,” Mr Harb said.

Nato has long formed partnerships with Arab states and this year marks the 20th anniversary of the Istanbul Co-operation Initiative, which formalised Nato's engagement with the UAE, Bahrain, Qatar and Kuwait.

Arab countries have worked alongside Nato troops on several missions, with the UAE contributing to the International Security Assistance Force mission in Afghanistan.

Middle Eastern partners have also been involved with Nato counter-piracy operations off the Horn of Africa and in Libya in 2011.

Underscoring the importance of the region, Nato's Secretary General Jens Stoltenberg in December visited Saudi Arabia to outline his vision for deeper co-operation, marking the first visit to Riyadh by a sitting Nato leader.

He outlined several areas where Nato and Saudi Arabia could increase co-operation, including maritime security, protecting critical infrastructure and the fight against terrorism.

Mr Stoltenberg's term ends this year and he is being replaced by former Dutch prime minister Mark Rutte.

Another area of focus at this week's summit will be how US President Joe Biden comports himself on the world stage after his disastrous debate performance last week, which has increased the likelihood of the ardent Nato supporter being replaced by Donald Trump, who is sceptical of the alliance.

When asked at the debate whether he would pull the US out of Nato, Trump shrugged.

Jihan Abdalla contributed to this report from Washington.

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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Updated: July 08, 2024, 3:06 AM