DUBAI // The UAE embassy in London has outstanding traffic-congestion charges of more than Dh50,000.
However, that pales when compared with the amount unpaid by the United States embassy, which owes Transport for London Dh52 million. The congestion charge is levied on motorists for driving in certain parts of the city and costs Dh62 a day.
“The UAE is usually very good at paying the congestion charge,” said a spokesman for Transport for London. “That said, to date there are 70 outstanding congestion charge penalty charge notices totalling £8,195.”
A spokesman for the UAE embassy was not available for comment.
Transport for London is currently owed Dh476 million from embassies for non payment of congestion charges. It has posted on its website a list of the 74 worst offenders, who owe more than Dh619,000. The UAE is not among them.
Behind the US is Japan, which owes Dh36m, Russia, which owes Dh32m, Nigeria, which owes Dh29.3m, and Germany, which owes Dh24.5m.
The issue is a contentious one. Many embassies see the congestion charge as a tax, and therefore declare themselves exempt.
When Barack Obama visited the UK in 2011, the mayor of London, Boris Johnson, asked the US president directly for a cheque for defaulted congestion charges.
The US embassy in London has a statement on its website saying that while it is willing to pay parking or speeding charges, it refuses to pay congestion charges because it believes they constitute a tax.
“Our position on the direct tax established by Transport for London in 2003, more commonly known as the congestion charge, is based on the 1960 Vienna Convention on Diplomatic Relations, which prohibits the imposition of this sort of tax on diplomatic missions,” the embassy statement says.
“Our position is wholly in accordance with that agreement to which the United States and the United Kingdom are both signatories, and it is a position shared by many other diplomatic missions in London.”
Transport for London, however, has rejected the view that the congestion charge is a tax, claiming that it is a charge for a service.
The authority is pushing for the matter to be ruled on by the International Court of Justice.
“We and the UK government are clear that the congestion charge is a charge for a service and not a tax,” said Paul Cowperthwaite, TfL’s general manager for congestion charging.
mcroucher@thenational.ae
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
