Hong Kong plans to relax some of its Covid-19 measures next month, lifting a ban on flights from nine countries including the US, the UK, France and India, reducing quarantine time for arrivals from abroad and reopening schools.
The moves, announced on Monday by Chief Executive Carrie Lam, could quieten some criticism from residents who have become increasingly frustrated with the territory's stringent measures, some of which have been in place for more than two years.
The flight ban would be lifted from April 1, while hotel quarantine for arrivals could be cut to seven days from 14 if residents tested negative, Lam said. She had previously said measures would be in place until April 20.
Schools would resume face-to-face classes from April 19, after the Easter holidays, while public venues including sports facilities would also reopen from April 21, she said.
Hong Kong's border has effectively been shut since 2020, with few flights able to land and hardly any passengers allowed to transit, effectively isolating a territory that had built a reputation as a global financial hub.
The ban had made it difficult for residents to return to Hong Kong, with many spending time known as "washing out" in other countries for two weeks before being allowed to return.
The rules, together with constant mixed messaging from the government, including whether a citywide lockdown and mass testing would take place, have triggered an exodus of residents in the past two months.
Net outflows show more than 54,000 people have left Hong Kong so far in March, against more than 71,000 in February and nearly 17,000 in December before the fifth wave of the pandemic hit, prompting fears for the city's longer-term competitiveness.
Businesses and the territory's economy are reeling from widespread closures, while doctors say many of its 7.4 million residents are grappling with rising mental health issues, particularly among low-income families.
A plan to carry out mass coronavirus testing would be put on hold, Lam said, citing experts who said it was not a suitable time.
While Hong Kong has officially stuck to the "dynamic zero" coronavirus policy, similar to mainland China, which seeks to curb all outbreaks, it has been shifting to mitigation strategies as deaths skyrocketed.
Hong Kong has registered the most deaths per million people globally in recent weeks owing to a large proportion of elderly people who were still unvaccinated as the highly transmissible Omicron variant ripped through care homes.
The densely packed territory has recorded more than a million infections since the pandemic started and about 5,000 deaths — most of them in the past month.
As many as four million people could be infected according to estimates from health experts as many residents have contracted the virus and isolated at home without notifying authorities.
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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