A student waves Bangladesh's national flag, during a protest to demand accountability and trial against the country's ousted Prime Minister Sheikh Hasina, near Dhaka University in the capital on August 12. AFP
A student waves Bangladesh's national flag, during a protest to demand accountability and trial against the country's ousted Prime Minister Sheikh Hasina, near Dhaka University in the capital on August 12. AFP
A student waves Bangladesh's national flag, during a protest to demand accountability and trial against the country's ousted Prime Minister Sheikh Hasina, near Dhaka University in the capital on August 12. AFP
A student waves Bangladesh's national flag, during a protest to demand accountability and trial against the country's ousted Prime Minister Sheikh Hasina, near Dhaka University in the capital on Augus


What is a country's rationale in granting asylum to fallen leaders?


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August 20, 2024

Where can a spurned leader go? This was a serious concern for Bangladeshi prime minister Sheikh Hasina when outraged mobs forced her ejection from office. The military whisked her to safety in India.

In nearby countries, Pakistani president Pervez Musharraf in 2016, Afghan president Ashraf Ghani in 2022 and Sri Lankan president Gotabaya Rajapaksa shared this fate.

“Uneasy lies the head that wears the crown” has been true for ages. The 20th century’s notable exiles included Ottoman Sultan Mehmed VI, Greek King Constantine I, German Emperor Wilhelm II, Ethiopian Emperor Haile Selassie, and Shah Reza Pahlavi of Iran.

Their elected successors were no more secure. At least 60 presidents and prime ministers have been cast out of their homelands in the decades since. Exile to a safe foreign haven is a common, and privileged, retirement route for the leaders of troubled states.

This could be justified on humanitarian grounds; imperilled leaders are entitled to seek survival. As when Gen Musharraf sought care in Dubai for a serious medical condition that had no provision in Pakistan. Mr Ghani was ultimately just another of the millions of Afghans fleeing the Taliban.

Taliban security personnel take part in a military parade to celebrate the third anniversary of the Taliban government takeover, in Bagram, Afghanistan, on August 14. EPA
Taliban security personnel take part in a military parade to celebrate the third anniversary of the Taliban government takeover, in Bagram, Afghanistan, on August 14. EPA
An Afghan woman (C) films Taliban security personnel celebrate the anniversary of the Taliban takeover, in front of the former US Embassy in Kabul, on August 14. AFP
An Afghan woman (C) films Taliban security personnel celebrate the anniversary of the Taliban takeover, in front of the former US Embassy in Kabul, on August 14. AFP

But are those given shelter being helped to avoid accountability for alleged crimes? That was the claim made by his critics when Uganda's Idi Amin got sanctuary in Saudi Arabia in 1979. The justification, however, in such cases is that removing toxic actors allows resetting a nation caught up in intractable violence.

When to run is a tricky judgment for an unpopular leader fearing vengeance from aggrieved opponents. Nicolae Ceausescu, Romania’s president, left it too late. Caught fleeing a 1989 uprising, he was hastily convicted and executed. Was his show trial just? Never mind, say those applauding this as necessary to shift Romania’s trajectory towards democracy.

An exiled leader is not necessarily permanently undone

When Muammar Qaddafi fell, he was badly beaten and killed in 2011. Elsewhere, Iraq’s notorious president Saddam Hussein also did not flee the country, and was tried and hanged in 2006.

Did speedy executive justice – including capital punishment – achieve stability and peace? Not yet in Libya and Iraq, and Uganda still has governance challenges.

Mengistu Haile Mariam, the Ethiopian head of state who authored an extensive campaign of “red terror”, got refuge in Zimbabwe in 1991. Courts under Mr Mengistu’s successor sentenced him in his absence to death for genocide. If the intent was to act firmly to break Ethiopia’s cycles of violence, it failed, as the nation remains mired in insecurity.

What are countries thinking when granting asylum to a ruler fallen from grace?

There could be cultural and personal connections as when, in 2000, Japan sheltered Peruvian president Alberto Fujimori, who was accused of corruption and human rights abuses. Colonial links and obligations also play a role. Many overturned have found comfort in the UK, France or Belgium. The Philippines president Ferdinand Marcos Sr got lifted by the US Air Force to Hawaii allegedly along with a billion dollars in currency, gold and jewels to ease the inconvenience of exile.

But it is creatively finessed realpolitik that dictates high-level asylum decisions. As a UK government official dealing with Sierra Leone in the 1990s, I was involved in encouraging the military head of state Valentine Strasser to stay away when he was ousted in yet another coup. A fellowship to study at the University of Warwick was duly engineered through the UN to allow a face-saving exit without granting him formal asylum, which civil society was strongly against.

When activists tried to prosecute despotic Haitian president “Baby Doc” Duvalier who decamped to France in 1986, the authorities claimed not to know where he was as the Schengen agreement had abolished internal EU border controls. But the neat corollary was that Mr Duvalier could not get political asylum either under the EU’s policies against impunity for egregious human rights violations.

An exiled leader is not necessarily permanently undone. It was in his Paris exile that Ayatollah Ruhollah Khomeini plotted the 1979 revolution returning triumphantly to Iran as its supreme leader.

Ivorian president Laurent Gbagbo is a fascinating case. Losing a civil war, he was sent to the International Criminal Court in 2011 for crimes against humanity. Acquitted after eight years in custody, he recuperated in Belgium before returning home. He plans to contest next year’s presidential elections.

Burkinabe president Blaise Compaore was handed a life sentence in absentia for murdering his predecessor and spent eight years in asylum in Ivory Coast. But a military coup in 2022 allowed Compaore to return.

Of course, exiles can pose serious headaches for hosts. They require costly security against manifold enemies and at times risk furious demonstrations against their misdeeds that also bring embarrassing publicity for the host.

A political twist comes when diasporas of political and humanitarian refugees are themselves divided for and against a former leader. This would perhaps be a consideration for the UK, with its large Bangladeshi diaspora, if Sheikh Hasina were to apply for asylum there.

It’s trickier when exiled leaders plot against their successors out of revenge or in hope to regain power. This causes ongoing instability, and strains diplomatic relations between hosting and affected nations.

Hosts have their own calculations of interest, too. For those involved in regime change, as the US was in Latin America, it may be handy to have an exiled leader readily available to step back in. Cuban strongman Fulgencio Batista was overthrown in 1959, but he found a good home in Portugal in case the day should come when Fidel Castro's revolution could be reversed.

There was similar calculation around Afghan king Zahir Shah’s long exile in Rome. Could his royal status unite Afghanistan’s quarrelsome factions for peace? The Dalai Lama of Tibet is exiled in India from where he inspires his followers around the world. This suits western interests, much as it troubles China.

Ukraine’s Maidan Revolution drove president Viktor Yanukovych to exile in Russia in 2014. For the Kremlin, he could have utility to legitimise its desired outcome from the Ukraine war.

But using the “golden parachute” of exile has become harder as the world has moved from impunity into accountability. This was signalled by the 1998 arrest of former Chilean dictator Augusto Pinochet in London because of a Spanish warrant. Legal innovations, such as the rejection of the notion of sovereign immunity and universal jurisdiction for crimes against humanity, have meant that justice is going increasingly global.

That was helped by the creation of international tribunals and courts for former Yugoslavia (1993), Rwanda (1994), Sierra Leone (2002) and Cambodia (2004). The ICC in 2002 consolidated the sea change.

Liberian strongman Charles Taylor had originally got asylum in Nigeria, but that failed to protect against extradition, trial and a 50-year prison sentence in 2012 for what the judge called the “most heinous and brutal crimes in recorded human history”. Thus, the hiding places for leaders committing egregious abuses have shrunk.

But that brings another challenge. With exile no longer guaranteeing safety, where does an embattled strongman go, even if he is somehow cajoled to leave?

Has the genocide case at the International Court of Justice put Myanmar's generals into an existentialist bind that perpetuates the violence? Similar judicial proceedings involving both ICC and ICJ against the leaders of Israel and Gaza must influence war-and-peace dynamics there.

Strengthened international provisions for protecting citizens against egregious abuses through challenging the impunity of leaders is good. But it would be perverse if the remedy somehow prolonged underlying conflicts and associated suffering. Therefore, it is worth retaining asylum possibilities for disgraced leaders as a pragmatic option for crisis resolution. But how to do that without compromising the principles of justice remains a dilemma.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Tax authority targets shisha levy evasion

The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.

Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".

The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.

He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.

"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.

As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.

Company Profile

Company name: NutriCal

Started: 2019

Founder: Soniya Ashar

Based: Dubai

Industry: Food Technology

Initial investment: Self-funded undisclosed amount

Future plan: Looking to raise fresh capital and expand in Saudi Arabia

Total Clients: Over 50

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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

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Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
  • Stay invested: Time in the market, not timing the market, is critical to long-term gains.
  • Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
  • Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
 
 
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  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Updated: August 25, 2024, 2:37 PM