NEW YORK // World leaders poured into Manhattan this weekend in the run-up to what is expected to be one of the best-attended UN General Assembly meetings in history, with high hopes for progress on Middle East peace, tackling climate change and nuclear disarmament.
Amid the diplomatic cacophony, Barack Obama will make his UN debut as US president and share the world body's stage with such political mavericks as Libyan leader Muammer Qadafi and Iran's president Mahmoud Ahmadinejad.
In uncharacteristically frank language, he singled out the US and China, two of the world's biggest polluters, as "key countries which can make a great impact" on talks towards hammering out a successor to the 1997 Kyoto Protocol.
With only three months left before 180 nations gather to seal the deal in Copenhagen, Mr Ban's summit is something of a gamble: an informal chat between world leaders across round-table discussions, rather than the UN's typically long-winded oratories.
But there is plenty to overshadow the South Korean diplomat's novel meeting, with Mr Obama elevating nuclear disarmament to the top of his UN agenda by selecting the topic for the first ever Security Council summit to be chaired by a US president.
On Thursday, the 15-nation body will debate a US-drafted resolution calling for all countries with atomic weapons to scrap their stockpiles - pointing to the permanent, nuclear-armed members of the council: the US, Russia, China, the UK and France. Delegates will also highlight India and Pakistan, which have not signed the 1970 nuclear Non-Proliferation Treaty but nonetheless possess atomic arsenals, Israel, which is assumed to possess nuclear warheads, and the hotly debated programmes of Iran and North Korea.
Mr Ban describes a "very rare momentum" behind the debate, with the Conference on Disarmament breaking a 12-year stalemate in May and a bilateral deal between the US and Russia to cut weapons stockpiles the following month.
Mr Obama's announcement on Thursday to shelve plans for an Eastern European missile shield, devised under the administration of George W Bush, sends a powerful message of co-operation to Moscow ahead of the meeting.
Likewise, the White House alternative of boosting missile defence across south-eastern Europe, Turkey and Israel points instead to the threats posed by Iran's current ballistic missile arsenal.
Yet Mr Ahmadinejad's presence does not guarantee further rapprochement between Washington and Tehran, with Susan Rice, the US ambassador to the UN, saying there is no meeting scheduled between Mr Obama and Iran's leader.
Ms Rice said the council's five permanent members and Germany will meet Iran on the sidelines, although Tehran has said it is unwilling to discuss its atomic programme, which it claims is designed to generate electricity.
The US is concerned that Tehran might be developing nuclear warheads, and Mr Ahmadinejad further alienated western countries on Friday with his latest polemic, describing the Holocaust as a "mythical claim". The US secretary of state, Hillary Clinton, kept open the prospect of further sanctions against Tehran, saying "we will soon see if the Iranians are serious" about negotiations during a speech at the Brookings Institution, a Washington-based think tank, on Friday.
Middle East peace looked set to remain an ever-elusive goal after America's special envoy to the region, George Mitchell, returned from Israel on Friday without securing a deal to halt construction and remove Jewish settlements on Palestinian soil. Speculation was rife that Mr Obama would moderate talks between Israel's prime minister, Benjamin Netanyahu, and the Palestinian president, Mahmoud Abbas, on the sidelines of the assembly.
But Ms Rice said on Friday she was "not in position to announce anything" after Mr Mitchell returned, having failed to secure the moratorium on settlement-building that was needed to draw the Palestinians back to the bargaining table.
On Myanmar, Mr Ban sent a cautious approval to the ruling junta on Friday, saying he "welcomes the release of a limited number of political prisoners" among the 7,114 convicts released last week.
The isolated military regime is sending its highest-level delegation to the annual UN meeting in more than a decade, headed by the prime minister, Gen Thein Sein.
Another UN concern, the triumphalist attitude of Sri Lanka's government following victory over Tamil separatists after 25 years of civil war in May, remains problematic. The UN's undersecretary general for political affairs, Lynn Pascoe, criticised the detention of 300,000 Tamils during his visit to the island last week, securing another government pledge to release the refugees from military-run camps by the end of January.
For Jeffrey Laurenti, a UN watcher for more than two decades, assembled world leaders will be cautiously assessing whether America's "change in mood" under Mr Obama heralds a longed-awaited "change in policy".
"This is the first General Assembly session since George Bush left office, so you have a fundamentally different mood set by the largest most influential guarantor of the whole UN system," said Mr Laurenti, a policy expert from The Century Foundation, a US think tank. "This is Obama's stage in front of the entire world community - so this becomes the opportunity to see whether his asserted commitment to multilateralism and engagement can actually produce results."
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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.”
Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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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