Tensions between the US and Iran are playing out at sea. AP
Tensions between the US and Iran are playing out at sea. AP
Tensions between the US and Iran are playing out at sea. AP
Tensions between the US and Iran are playing out at sea. AP

How Iran can make peace with Saudi Arabia


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In a rare and in-depth interview on Tuesday, Saudi Arabia's Crown Prince Mohammed bin Salman said his country is not opposed to talks with Tehran to discuss ways the two regional powers could co-operate in the interests of peace. The decades-old rivalry between Saudi Arabia and Iran has been exacerbated in recent years by the proliferation of Iranian-backed militant groups across the Middle East, including on Saudi Arabia’s own border, in Yemen. As the Crown Prince noted, these groups present the primary roadblock to progress in bilateral relations.

For Iran to give them up will be difficult. On Tuesday Gen Kenneth McKenzie, head of the US military's Central Command, described a nuclear deal signed between western powers and Iran in 2015 as a "flawed document" but better than nothing, encouraging a collective response to the threat posed by Tehran. It was, unfortunately, not inclusive. Without the participation of Arab allies, the deal's collaborative intentions were never realised. The Biden administration could make the same mistake in its desire to return to a similar arrangement as soon as possible.

Saudi Crown Prince Mohammed bin Salman has given a rare interview on his country's economic, strategic and political policies. Reuters
Saudi Crown Prince Mohammed bin Salman has given a rare interview on his country's economic, strategic and political policies. Reuters
Iran must realise the limits of a diplomatic model built on aggression

In 2015, the most obvious threat to global security was Iran's nuclear programme. Six years later, it is much more. Tehran's expansionism, proxies, militia networks, ballistic missile programme and asymmetric warfare flourished because the deal on the nuclear issue. Permanent members of the UN Security Council must acknowledge this new and dangerous reality. If current talks with Iran in Vienna are to make the world safer, leaders must demand that Tehran closes its Pandora's box.

Iran will be unwilling to give up these strategic wins. They are, however, built on shaky ground. Tehran's network of militias has been weakened by the power vacuum that followed America's killing of senior IRGC commander Qassem Suleimani last year. The absence of his emblematic presence has loosened a once infamously well organised command structure. Gen McKenzie's statement on Tuesday even suggested that Iran's supreme leader, Ayatollah Ali Khamenei, is not entirely in control of the IRGC. Recent audio leaks of Foreign Minister Javad Zarif cause further confusion.

This is not something to be celebrated. Yesterday the US Navy released footage of what it claimed to be IRGC boats harassing its ships in the Gulf. This strategic disintegration could lead to Iranian forces overstepping the mark. But a security breakdown also leaves Tehran vulnerable. The assassination of a leading atomic scientist and a separate explosion at its Natanz facility have rocked the country's nuclear programme, key leverage that it has over regional nations.

Crown Prince Mohammed's latest interview summarised the many ways Saudi Arabia is changing at home and abroad, with a clear strategic vision. Riyadh wants détente with Tehran, but only if it is built on a genuine effort to curtail its militant and aggressive activities. Iranian leaders, wherever power truly lies, must realise the limits of a diplomatic model built on aggression. Until then, peace is difficult to attain, even with all the goodwill in the world.

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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This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

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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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