With the parliamentary election over in Lebanon, the country will have to focus on three broad objectives. First, forming a government. Second, preparing for the presidential election in September or October. And third, moving forward on essential economic reforms to alleviate the suffering of the population. However, the election results may well indefinitely hinder the achievement of these objectives.
The first priority will be to form a new government. Under normal circumstances, this should not pose a major challenge, since the government should be in power only until the presidential election. However, if there is no consensus around the next head of state and Lebanon enters a presidential vacuum, the government will take on presidential powers and may last far longer than expected. That is why negotiations over its formation are bound to be highly divisive.
The question of who will succeed President Michel Aoun is also contentious. Until the parliamentary election, the two front-runners were Gebran Bassil, Mr Aoun’s son-in-law, and Suleiman Franjieh, a politician from northern Lebanon, whose grandfather was president from 1970 until 1976. However, the largest Christian bloc post-elections will be controlled by the Lebanese Forces, whose leader Samir Geagea also has presidential ambitions and who will strongly contest Mr Bassil and Mr Franjieh.
A major factor that will help define the period ahead is regional calculations
Mr Bassil, who heads the Free Patriotic Movement, lost ground in the legislative election, while the list backed by Mr Franjieh did relatively poorly. Neither man, therefore, will be able to credibly make the case that he is the most legitimate Maronite Christian candidate for the presidency. The fact that Hezbollah strenuously opposes Mr Geagea suggests there will be no easy agreement on a successor to Mr Aoun, and the outcome may be a long political void, unless a compromise can be reached.
The election results suggest that two broad blocs will emerge in Parliament – one led by the Lebanese Forces, with its allies, particularly from the Sunni community; and a Hezbollah-led coalition, formed with the Aounists. This may make for a period of stalemate ahead, because of Lebanon’s widening polarisation.
All this will have a fundamental, and very negative, bearing on economic reforms, which have not progressed since the economy collapsed in 2019. Yet, with economic indicators continuing to deteriorate and the World Bank predicting zero growth in 2022, Lebanon cannot afford to waste more time.
A report this month by the UN special envoy on poverty, Olivier de Schutter, accused the government and the central bank of human rights violations in impoverishing the population. The report said that Lebanese officials had “a sense of impunity", and appeared to be living “in a fantasy land".
Recently, the Lebanese government and the International Monetary Fund agreed to what is known as a staff agreement, in which the IMF said it would provide $3-4 billion to Lebanon if the country implemented required economic reforms and an audit of the banking sector. Yet, continued factionalism has hindered progress.
If political divisions are exacerbated in the coming months, a final agreement over an IMF-led reform programme will be highly improbable this year. What this would mean is that in the best-case scenario, Lebanon could begin focusing on economic priorities only after a new president comes to office, whenever that occurs.
What is unfortunate in this regard is that the government has reportedly advanced in its economic plan to take Lebanon out of its crisis. Recently, Deputy Prime Minister Saadeh Al-Shami, who is playing a key role in negotiations with the IMF, stated that the technical aspects of banking sector reform were completed. While this is good news, several more months of continuing deadlock could have a disastrous impact on the well-being of the Lebanese, and on banks in particular.
Finally, a major factor that will help define the period ahead is regional calculations. A number of Arab states have shown a renewed momentum in trying to contain Hezbollah’s power in Lebanon, which has made the party uneasy. This mood will not have been helped by the gains made by the Lebanese Forces in the election. The mainly Christian party has close ties with Saudi Arabia, which Hezbollah sees as a threat.
As the Arab states, especially the Gulf states, reinforce their stakes in Lebanon, this could lead to one of two possible outcomes: a struggle for influence with Iran in the country that is unlikely to come out with a clear winner. This can potentially bring about an eventual agreement to share influence. Alternatively, Hezbollah and Iran might try in some way to reimpose their hegemony. But this would be risky, as the strength of the party’s cross-sectarian alliances have been eroded.
The most likely outcome is that Lebanon will remain at a standstill in the coming months, and perhaps even beyond that, as the two broad alignments neutralise each other in Parliament. Neither side will be able to overcome the other, and both sides will want to avoid a civil war. Meanwhile, the Lebanese will continue to suffer as their political parties pursue clashing agendas, with little concern for the population.
if you go
The flights
Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.
The hotel
Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.
The tour
Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg
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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MATCH INFO
Liverpool 2 (Van Dijk 18', 24')
Brighton 1 (Dunk 79')
Red card: Alisson (Liverpool)
RESULT
RS Leipzig 3
Marcel Sabitzer 10', 21'
Emil Forsberg 87'
Tottenham 0
Martin Sabbagh profile
Job: CEO JCDecaux Middle East
In the role: Since January 2015
Lives: In the UAE
Background: M&A, investment banking
Studied: Corporate finance
THREE
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England v South Africa schedule:
- First Test: At Lord's, England won by 219 runs
- Second Test: July 14-18, Trent Bridge, Nottingham, 2pm
- Third Test: The Oval, London, July 27-31, 2pm
- Fourth Test: Old Trafford, Manchester, August 4-8
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
MATCH INFO
Barcelona 4 (Messi 23' pen, 45 1', 48', Busquets 85')
Celta Vigo 1 (Olaza 42')
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
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German plea
Ukrainian President Volodymyr Zelenskyy told the German parliament that. Russia had erected a new wall across Europe.
"It's not a Berlin Wall -- it is a Wall in central Europe between freedom and bondage and this Wall is growing bigger with every bomb" dropped on Ukraine, Zelenskyy told MPs.
Mr Zelenskyy was applauded by MPs in the Bundestag as he addressed Chancellor Olaf Scholz directly.
"Dear Mr Scholz, tear down this Wall," he said, evoking US President Ronald Reagan's 1987 appeal to Soviet leader Mikhail Gorbachev at Berlin's Brandenburg Gate.
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