Rishi Sunak’s spate of political successes has come to an end this week as he faces an ethics investigation and a potential cabinet resignation.
The British Prime Minister has prospered this year by producing the Windsor framework that appeared to resolve Ulster’s post-Brexit woes, tough legislation on small boat crossings, repairing the economy and settling a number of strikes.
It had got to the point that the Conservatives had closed the gap on Labour to 17 points – which is considered an improvement given polling that showed the Tories adrift by 25 points or more.
But on Monday it was announced that the Prime Minister was under investigation by parliament’s ethics committee after he failed to disclose that his wife’s firm might have benefited from a generous kindergarten policy revealed in the budget last month.
Akshata Murty is a shareholder in Koru Kids, a London childcare agency that will almost certainly benefit from the new incentives for people to become childminders.
While ministers are required under their code of conduct to be “open and frank” about declaring their relevant interests, Mr Sunak failed to disclose his wife’s holding under questioning from MPs at the liaison committee last month.
When asked by a Labour MP whether if he had anything to declare over the new childcare policies, Mr Sunak responded: “No, all my disclosures are declared in the normal way.”
But Koru Kids is among six agencies featured on a government website that will benefit from payments of £600 to register childminders.
When this emerged, the prime minister declared the shareholding interest, opening up the inquiry into whether he breached the ministerial code.
Downing Street is confident Mr Sunak will be cleared of wrongdoing, perhaps because he was not specifically asked about Koru Kids and he could argue that he is not aware of every firm his millionaire wife has investments in.
The investigation will need to examine whether the PM should have made a declaration to parliament and the committee as well as to the Cabinet Office.
Thus when he faces Prime Minister’s Questions on Wednesday, instead of basking in the glow of positive developments, Mr Sunak will sit even more uneasily on the green bench next to the his deputy prime minister Dominic Raab.
That discomfort also coming from knowing that a six month inquiry into bullying allegations during Mr Raab's time as foreign secretary will report at the end of this week.
Mr Raab, who is also justice secretary, has stated that he will resign if he is found to have bullied staff forcing the prime minister to find someone to fill two spots in his cabinet.
But Mr Sunak has so far demonstrated an ability to cope with adversity and, through his diligence in absorbing detail, the character to conjure what appears to be political magic.
It will be an ability much in demand if he is to drag the Conservatives to another general election victory next year.
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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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.
Zayed Sustainability Prize
