Azerbaijan launched an offensive it called an “anti-terrorist operation” in the disputed territory of Nagorno-Karabakh on Tuesday, in what Armenia described as an act of “ethnic cleansing”.
Both sides reported shelling as violence erupted in the territory, over which Armenia and Azerbaijan fought a 44-day war in 2020.
The EU called for an “immediate halt” to the fighting. Russia, which has peacekeepers in the region, said it received only a few minutes' notice of the escalation.
Azerbaijan's Defence Ministry said it was firing at military targets as part of “anti-terrorist activities” to disarm Armenian forces in the region. Nagorno-Karabakh is internationally recognised as part of Azerbaijan, but the majority of people there are ethnically Armenian.
Armenia said its neighbour had “unleashed another large-scale aggression against the people of Nagorno-Karabakh, aiming to complete its policy of ethnic cleansing”. A separatist, pro-Armenian government in the region called it a “large-scale military offensive” by Azerbaijan and reported civilian casualties.
Blasts were heard in the separatist stronghold of Stepanakert, AFP reported, as Azerbaijan said it was firing “high-precision weapons” against military targets. Armenia rejected Azerbaijan’s claim that units of its military were in Nagorno-Karabakh.
Six people were reported killed in landmine explosions hours before Azerbaijan announced its offensive.
Josep Borrell, the EU's top diplomat, called for the “immediate cessation of hostilities and for Azerbaijan to stop the current military activities”.
“There is an urgent need to return to dialogue … this military escalation should not be used as a pretext to force the exodus of the local population,” Mr Borrell said. European Council president Charles Michel called the offensive “devastating news”.
Russian Foreign Ministry spokeswoman Maria Zakharova said Moscow was “deeply concerned” about the escalation after being informed about Azerbaijan's operation “only minutes before it began”.
The territory has been disputed since the 1990s aftermath of the break-up of the Soviet Union. Azerbaijan regained parts of Nagorno-Karabakh and surrounding areas in the six-week war in 2020, which ended with an armistice.
Azerbaijan alleges that Armenia has smuggled in weapons since then. Tension has simmered over a blockade of the road connecting Nagorno-Karabakh to Armenia, causing severe food and medicine shortages in the region.
Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
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
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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