The first EU-GCC summit was held in Brussels last October. The EU and GCC have been successful in many regards. However, both continue to face challenges, some of them shared. Reuters
The first EU-GCC summit was held in Brussels last October. The EU and GCC have been successful in many regards. However, both continue to face challenges, some of them shared. Reuters
The first EU-GCC summit was held in Brussels last October. The EU and GCC have been successful in many regards. However, both continue to face challenges, some of them shared. Reuters
The first EU-GCC summit was held in Brussels last October. The EU and GCC have been successful in many regards. However, both continue to face challenges, some of them shared. Reuters


The GCC and EU have much to learn from each other


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May 02, 2025

The EU and GCC are examples of supranational institutions with very different designs. For many years, the EU served as a model that the GCC looked to emulate. Today, however, the GCC might serve as a source of inspiration for the EU in some areas. The time is right for collaborative EU-GCC research on the optimal structure of supranational institutions.

The world started experimenting with supranational institutions in earnest following the conclusion of the Second World War, spawning examples such as the Arab League, African Union and Association of South-East Asian Nations. These differ in terms of the level of political and economic integration, and the degree to which consensus is required for the formulation and implementation of central rulings. For example, the EU model shows high degrees of economic integration with moderate levels of political centralisation, while the Arab League is a much looser grouping where member states retain total sovereignty.

If the success metric for a supranational institution is its track record in defusing conflict, then the leading performer is surely the EU, which transformed Europe from the land of perennial wars to an exemplar of civilised conduct. While the EU model has served as a useful template for the GCC countries, so far, the six member states have maintained a supranational structure that ensures each retains a high degree of independence. Accordingly, the GCC often operates more as an intergovernmental forum.

While the EU model has served as a useful template for the GCC countries, so far, the six member states have maintained a supranational structure that ensures each retains a high degree of independence. AFP
While the EU model has served as a useful template for the GCC countries, so far, the six member states have maintained a supranational structure that ensures each retains a high degree of independence. AFP

To see the difference more clearly, consider that in the case of the EU, institutions such as the European Council and European Parliament have legislative authority that member states must respect, even if they disagree with the law passed. Further, the European Commission has significant executive authority, in addition to having the capacity to punish member states that fail to comply with supranational directives, in conjunction with the European Court of Justice. In the economic domain, the European Central Bank is the sole determinant of monetary policy for the 20 out of 27 EU member states that have adopted the euro, while the EU common market ensures that commercial regulations are virtually harmonised across the bloc.

In contrast, the GCC’s primary bureaucratic institution – and the loose analogue to the European Commission – is the GCC Secretariat General. It does not have the ability to ensure compliance through fines and other punitive instruments, which has contributed to continuing challenges in the implementation of the GCC single market. Moreover, despite the nominal status of the GCC as a customs union, several member states have promulgated bilateral free trade agreements outside the GCC.

The EU and GCC have been successful in many regards. However, both continue to face challenges, some of them shared.

For example, in the case of the EU, these include the lack of consensus on the structure of a fair migration agreement; slow decision-making at the EU-level making citizens feel disenfranchised; and tension over optimal monetary policy given the intra-EU differences in fiscal and monetary needs.

Greater co-operation would not only deepen EU-GCC ties but could also involve Asean, the African Union and the South American trade bloc Mercosur

In the case of the GCC, there continues to be a deficit in defence and security integration. The bloc’s ability to negotiate free trade agreements has been limited by the divergence in the member states’ trade interests, while foreign policy heterogeneity has also undermined the GCC’s ability to unify the six members’ diplomatic positions. This latter challenge in particular is very much evident in the case of the EU, too, with internal differences limiting the EU’s ability to act effectively in a variety of global crises including Ukraine and Gaza.

These challenges indicate that the knowledge of how to optimally structure supranational institutions is incomplete, and that there is much to gain by further studying these issues using modern scientific methods.

While European scholars have extensively analysed the EU’s institutions, their work tends to be inward-looking, rarely drawing lessons from other blocs such as the GCC. In contrast, the GCC has modelled many of its institutions on the EU’s experience, though its scholarly literature remains comparatively limited. Notably, plans for a Gulf Monetary Union were delayed after learning from the EU’s handling of the Greek euro crisis.

Given the many challenges facing the EU, it would be beneficial for European scholars to study the GCC’s experience. Today, GCC researchers are far more experienced than in past decades and can contribute meaningfully to such collaborations.

  • President Sheikh Mohamed held talks with GCC Secretary-General Jassim Al Budaiwi at Qasr Al Bahr in Abu Dhabi. All Photos: UAE Presidential Court
    President Sheikh Mohamed held talks with GCC Secretary-General Jassim Al Budaiwi at Qasr Al Bahr in Abu Dhabi. All Photos: UAE Presidential Court
  • Hosted in Abu Dhabi by the Ministry of Interior, the workshop will run from September 16 to 19
    Hosted in Abu Dhabi by the Ministry of Interior, the workshop will run from September 16 to 19
  • Sheikh Mohamed welcomes heads of GCC delegations, while stressing the importance of enhancing co-operation in the fight against drugs
    Sheikh Mohamed welcomes heads of GCC delegations, while stressing the importance of enhancing co-operation in the fight against drugs
  • Sheikh Sultan bin Hamdan bin Mohamed, Adviser to the UAE President and Chairman of the Camel Racing Federation (left) at the workshop
    Sheikh Sultan bin Hamdan bin Mohamed, Adviser to the UAE President and Chairman of the Camel Racing Federation (left) at the workshop
  • (From left) Sheikh Nahyan Bin Zayed, Chairman of the Board of Trustees of Zayed bin Sultan Al Nahyan Charitable and Humanitarian Foundation, Lt Gen Sheikh Saif bin Zayed Al Nahyan, UAE Deputy Prime Minister and Minister of Interior, Sheikh Nahyan bin Mubarak, UAE Minister of Tolerance and Coexistence and Sheikh Hamed bin Zayed
    (From left) Sheikh Nahyan Bin Zayed, Chairman of the Board of Trustees of Zayed bin Sultan Al Nahyan Charitable and Humanitarian Foundation, Lt Gen Sheikh Saif bin Zayed Al Nahyan, UAE Deputy Prime Minister and Minister of Interior, Sheikh Nahyan bin Mubarak, UAE Minister of Tolerance and Coexistence and Sheikh Hamed bin Zayed
  • The workshop is titled ‘Preparing the GCC Strategy for Combating Drugs 2025-2028'
    The workshop is titled ‘Preparing the GCC Strategy for Combating Drugs 2025-2028'

Greater co-operation would not only deepen EU-GCC ties but could also involve Asean, the African Union and the South American trade bloc Mercosur, enriching global understanding of regional governance. The collaboration could take various forms, such as physical research centres or virtual consortiums, with a hybrid model probably offering the greatest benefits by balancing deep immersion with broad participation.

Studying supranational institutions is crucial as regional blocs face growing challenges. While the EU and GCC follow different integration models, each offers valuable lessons. A research collaboration between their scholars would not only deepen academic understanding but also help address shared challenges.

With the GCC now a strong contributor to global scholarship, this is an ideal time for co-operation, aiming to develop more resilient, effective institutional frameworks that balance integration with national sovereignty.

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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.

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

Our family matters legal consultant

Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

Updated: May 02, 2025, 4:21 AM