Is Obama tough enough? We'll soon find out


James Zogby
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This week will tell us a great deal about the ability of the US president Barack Obama to be a strong leader and an honest broker in Middle East peacemaking. With the president having postponed his Asia visit in order to be on hand for the conclusion of the US congress' year long deliberations on health care reform, he will be in Washington for the annual policy conference for AIPAC, the strong US pro-Israeli lobby, and the Israeli prime minister Benjamin Netanyahu's visit to the US capital.

The president has demonstrated that he has the resolve to fight tough battles against powerful lobbies and hardened partisan opposition in the health care debate. Before attention shifts to the next domestic challenge, whether that be comprehensive immigration reform or a climate/energy bill, both of which involve taking on other powerful lobbies, the White House will have to face another tough issue knocking on its front door.

AIPAC is already gearing up to take on or take down a president who had the temerity to condemn Israel's settlement plans in Jerusalem. We've seen past administrations confront Israeli obstructionism. George HW Bush did it, and in subtle but clear ways, Bill Clinton did too. But the language used by this administration in the past week has been unprecedented and remarkably tough. The vice president Joe Biden "condemned" it, US secretary of state Hillary Clinton deemed Israel's behaviour "insulting to the United States", and General David Petraeus went further, stating that Israel's actions put American lives and prestige at risk. Then, at week's end, with Mrs Clinton participating, the Quartet issued its strongest statement yet reaffirming that East Jerusalem is occupied territory and condemning Israeli construction plans.

Equally remarkable has been the muted response from Congress. Except for a predictable few and some partisan shots from Senator John McCain, his ally Joseph Lieberman and congressman Eric Cantor, the Republican second in command of the house of representatives, key leaders in both houses of Congress have kept their silence. But this most probably won't last for long. With AIPAC in town for their annual gathering, many members of Congress running for re-election in November will in all likelihood make their required appearances to pay homage and express their "shock and dismay" at the administration's treatment of Israel. The entire affair will no doubt be orchestrated as a pro-Netanyahu pep rally, with an unmistakable anti-Obama undercurrent, all of which will only serve to demonstrate just how out of touch with American Jewish and Israeli opinion the famed and still powerful lobby has become. A recent poll in Israel shows 69 per cent of Israelis saying they believe Mr Obama is "even-handed" and a majority expressing their displeasure with Mr Netanyahu's leadership.

The big test for the White House will come when Mrs Clinton and Mr Netanyahu meet today, and Mr Netanyahu and the president meet tomorrow. Expect talk about the enduring and unshakable relationship but with all that out of the way, close attention should be paid to whether or not the administration backs away from their demands on Israel. A White House meltdown would doom the prospects for peace and would, as per the astute analysis of Gen Petraeus, do grave damage to US interests in the Arab World and beyond.

There are unconfirmed reports that Mr Netanyahu may blink and back down, but this may be mere game playing from the Israeli prime minister. We'll know soon enough. Far from being the pragmatist some have claimed him to be, Mr Netanyahu is an ideologue - a wily manoeuvring ideologue - always pushing and always looking for an escape hatch. From the beginning he irritated the Obama team, but it has been his recent aggressiveness that brought them to the breaking point. Having bigger regional issues at stake in Iraq, Iran, Afghanistan and the continuing effort to combat extremism, the White House could not tolerate Mr Netanyahu's most recent insult and were forced to respond.

Eager to begin talks, proximity or otherwise, the US administration got the Palestinians and the Arab League to swallow a bitter pill, dropping their demand for preconditioning the talks on a total settlement freeze. But Mr Netanyahu upended the entire affair with a series of announcements proclaiming Israel's rights in Hebron, Bethlehem, the Jordan Valley and provocative actions in Jerusalem that would have rendered talks moot.

This is why the White House acted and why they dare not back down. To create a replay of last autumn when the administration appeared to submit to Mr Netanyahu's game playing is a problem a White House spokesman said they are keen to avoid. There are those who question this president's mettle. If he wins on health care, and stands up to Mr Netanyahu in the same week, Mr Obama will have shown that he is well prepared to lead in the battles yet to come.

James Zogby is president of the Arab American institute in Washington, DC

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UAE jiu-jitsu squad

Men: Hamad Nawad and Khalid Al Balushi (56kg), Omar Al Fadhli and Saeed Al Mazroui (62kg), Taleb Al Kirbi and Humaid Al Kaabi (69kg), Mohammed Al Qubaisi and Saud Al Hammadi (70kg), Khalfan Belhol and Mohammad Haitham Radhi (85kg), Faisal Al Ketbi and Zayed Al Kaabi (94kg)

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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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Australia: Finch (c), Agar, Behrendorff, Carey, Coulter-Nile, Lynn, McDermott, Maxwell, Short, Stanlake, Stoinis, Tye, Zampa

India: Kohli (c), Khaleel, Bumrah, Chahal, Dhawan, Shreyas, Karthik, Kuldeep, Bhuvneshwar, Pandey, Krunal, Pant, Rahul, Sundar, Umesh

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Date started: March 2019

Founder: Dr Ali Al Hammadi 

Based: Abu Dhabi

Sector: AgriTech

Initial investment: None to date

Partners/Incubators: UAE Space Agency/Krypto Labs 

Founders: Abdulmajeed Alsukhan, Turki Bin Zarah and Abdulmohsen Albabtain.

Based: Riyadh

Offices: UAE, Vietnam and Germany

Founded: September, 2020

Number of employees: 70

Sector: FinTech, online payment solutions

Funding to date: $116m in two funding rounds  

Investors: Checkout.com, Impact46, Vision Ventures, Wealth Well, Seedra, Khwarizmi, Hala Ventures, Nama Ventures and family offices