Donald Trump withdraws US from Paris Climate Agreement for second time

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President Donald Trump withdrew the US from the Paris Climate Agreement on Monday, hours after he officially entered office.

In front of a large crowd during the inaugural parade, which was moved indoors due to extreme cold, Mr Trump signed an executive order ending US participation in the "unfair, one-sided Paris Climate Accord rip-off".

"The United States will not sabotage our own industries while China pollutes with impunity," he said, claiming that the country had the cleanest air and water during his previous administration.

Mr Trump has also promised to pursue increased US energy independence through a policy summarised by "drill, baby, drill" – or drilling for oil and natural gas at an accelerated rate.

The Paris Agreement, also known as the Paris Accords or Paris Climate Accords, is an international treaty on climate change signed in 2015.

Organisers of the COP21, including French President Francois Hollande, UN general-secretary Ban Ki-moon, UN Climate Change chief Christiana Figueres, and France's Foreign Minister and COP President Laurent Fabius announce the final draft of the Paris Climate Accords in 2015. Reuters

The treaty covers climate change mitigation, adaptation and finance. It is aimed at limiting long-term global temperatures to 1.5°C above pre-industrial levels.

The agreement is voluntary and allows nations to provide targets to cut their own emissions of greenhouse gases from the burning of coal, oil and natural gas. Those targets are supposed to become more stringent over time, with countries facing a February deadline for new individual plans.

Mr Trump has long been a critic of the plan. The Republican President also withdrew from the accords during his first term in office. Joe Biden re-entered the agreement after he took office in 2020.

Iran, Libya and Yemen are the only countries that have not ratified the agreement.

After the announcement, the UN released a statement in which it said: "The last 10 years have been the hottest in recorded history. We have to look no further than Los Angeles to see this human, ecological and economic disaster play out. The collective efforts under the Paris Agreement have made a difference but we need to go much further and faster together."

It added that UN Secretary General Antonio Guterres hoped individual US cities, states and businesses would continue to pursue lowering carbon emissions.

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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

Donald Trump withdraws US from Paris Climate Agreement for second time

America's new President has promised to pursue increased energy independence through a policy summarised as 'drill, baby, drill'

%E2%80%98FSO%20Safer%E2%80%99%20-%20a%20ticking%20bomb

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