The relationship between the Emirates and the US is going through a "stress test", the UAE's ambassador to America has said.
Yousef Al Otaiba, who is also a Minister of State, said there were days when the relationship was very healthy and days where the relationship is in question.
But speaking on Thursday at the International Defence Industry, Technology and Security Conference in Abu Dhabi, Mr Al Otaiba also underlined that UAE and US ties were built on trust.
The two countries have been partners for decades as talks continue on the sale of F-35 fighter jets to the UAE. In December, US Secretary of State Antony Blinken said his country was ready to sell the jets to the UAE, which has threatened to scrap the deal over stringent conditions.
"Today we are going through a stress test but I’m confident that we will get out of it and get to a better place,” Mr Al Otaiba said.
Speaking in a session at the conference, Mr Al Otaiba also said the number one challenge facing the world was drones because they were hard to control but constantly improving. It comes just months after Yemen's Houthi rebels launched an aerial attack on parts of the UAE.
"I think we are behind the curve on drones,” Mr Al Otaiba said. "It is ... very hard to create a proper defence system to prevent drone attacks. We have yet to develop a very ... robust drone defence system. That is going to be our main challenge in the future.”
The envoy additionally described increasing polarisation in the US, predicted how the private sector, rather than government, would drive UAE and US relations, and also outlined how the Emirates protects the technology it gets from America.
“Trust has been earned with the US over decades and not the last few years,” Mr Al Otaiba said. “Trust is when there is an American special operations mission going on somewhere like in Afghanistan that calls in for Emirati Air Force air support. That’s trust.
“We have a very strong and very clean track-record of not only getting the most sensitive American and other western technology, we also have an incredibly strong track record of protecting that technology. We have had zero incidents where anything has fallen into the wrong hands," he said.
“Anything we have gotten, we have protected. We take that very seriously.”
The envoy also said future UAE and US ties would be largely driven by the private sector in terms of creating jobs and technology.
“If we wait for the two governments to figure this out and take the lead, we are going to be behind. We need our private sector and the US private sector to be the cheerleaders for how this partnership develops for the future,” Mr Al Otaiba said.
“Everything I just described requires a very strong political understanding and relationship."
He said what concerned him more was the increasing polarisation and division in the US, where there is more disagreement and less room for compromise between two visions of what America should be.
“That is a danger not so much for the UAE but America. I’ve seen this get worse over the last few years. If we see a more unified America, it is good for everyone and good for the world but I worry that’s not happening.”
The ambassador was speaking at a defence exhibition where home-grown entities such as Edge and Tawazun are displaying their wares, from missiles to drones. Mr Al Otaiba said the UAE had moved on from a position 30 years ago where it was viewed as a “buyer”.
“We are not interested in just buying. We want countries and companies to come in here and help us create the industry we are trying to develop. We want people to transfer their technology here, we want people to develop their technology here [and] we want to create jobs in the industry here.
“We are going to develop an organic home-grown defence industry. The days of just being a buyer are over and we are open for business.”
He said the US private sector understood the UAE but public opinion had not moved on yet.
“Not everyone has adapted their view to the changes the UAE is going through. And where it wants to go. People look at us through the old lens,” he said.
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INDIA SQUADS
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Essentials
The flights
Emirates and Etihad fly direct from the UAE to Los Angeles, from Dh4,975 return, including taxes. The flight time is 16 hours. Alaska Airlines, United Airlines, Delta Air Lines, Aeromexico and Southwest all fly direct from Los Angeles to San Jose del Cabo from Dh1,243 return, including taxes. The flight time is two-and-a-half hours.
The trip
Lindblad Expeditions National Geographic’s eight-day Whales Wilderness itinerary costs from US$6,190 (Dh22,736) per person, twin share, including meals, accommodation and excursions, with departures in March and April 2018.
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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