For anyone watching the direction of the UAE's economic strategy in 2021, manufacturing and industry are the places to look.
On Monday, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, announced that the Emirates Development Bank (EDB) will offer financing of more than $8 billion (Dh30bn) to create and support 13,500 new UAE-based companies, with the aim that such firms will provide an extra 25,000 jobs. The move is a part of the country's wider "Operation 300bn", a programme that was announced last month to expand the GDP contribution of the nation's manufacturing sector, boosting economic diversification and taking full advantage of the country's reputation as a hub for energy and logistics. The target is a total sum of $80bn, more than double current levels of around $36bn.
These developments are not fully understood just by their numbers, however. They are strategies to deal with a less predictable global economy, which has been uncovered by the Covid-19 pandemic. Furthermore, with the advancement of technology and industries, the UAE is adapting to new realities by investing more in innovation and competitiveness and therefore strategic resilience.
The UAE's government is planning to boost sectors including technology, AI and robotics. EPA
The strategy will focus particularly on health care, infrastructure, food security and technology
The first-of-its-kind "Make it in the Emirates" campaign is part of this approach, ensuring not only that manufacturing is given a priority, but also research and development. The industrial sector's R&D is expected to contribute two per cent of the gross domestic product by 2031, up from current levels of just over one per cent. At home, the Made in UAE campaign will encourage the consumption of locally made products. Abroad, it will work to boost their export value in foreign markets.
As a first phase, EDB will launch a $270 million investment fund for start-ups and SMEs in 2022. This focus on the smaller scale is to foster a private sector that is friendly to enterprise, which, in an efficient and supportive regulatory environment, develops on its own without the need for intense government involvement.
EDB's strategy will centre particularly on supporting firms in health care, infrastructure, food security and technology, all sectors that have proved their worth during the pandemic. Around the world, their vulnerability, born of overreliance on global supply chains, affected all nations. EDB intends to help companies in these areas with financial support, but also an extensive range of non-financial options, such as advice on conducting market research, as well as corporate coaching and mentoring. This wide-ranging approach was informed by contributions from over 200 advisory stakeholders, as well as data gathered from 10 targeted surveys.
Few nations possess the agility to tie in immediate post-pandemic recovery with longer-term development for the decades ahead. EDB's strategy, as part of "Operation 300bn", does indeed build resilience to adapt to a suddenly more uncertain world. But, in equal measure, it plans for an optimistic future.
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
Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
