EU may consider trade action against Bangladesh over building collapse


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The European Union is considering trade action against Bangladesh to pressure Dhaka for improved safety standards after a building collapse killed hundreds of factory workers.

Duty-free access offered by Western countries and low wages have helped turn Bangladesh's garment exports into a Dh73.4 billion-per-year industry, with 60 per cent of clothes going to Europe.

But any action by the EU on Bangladesh's duty-free and quota-free access would require the agreement of all member states and could take more than a year to implement.

"The European Union calls upon the Bangladeshi authorities to act immediately to ensure that factories across the country comply with international labour standards," the bloc said.

Anger in Bangladesh has been growing since the illegally built Rana Plaza in Dhaka's commercial suburb of Savar collapsed last week, killing at least 402 people in the country's worst industrial accident.

There were about 3,000 people inside the complex, which was built on a swamp, when it collapsed. About 2,500 people have been rescued, but there are still some who are unaccounted for.

"Why are they taking so much time to pull out bodies?" asked a grief-stricken father who, like many others, has been waiting on the streets near the collapsed factory, hoping for information about his son.

Preparations were being made yesterday for the mass burial of about 40 people who cannot be identified.

Several thousand workers rallied in the capital to mark Labour Day and demand capital punishment for those responsible for the tragedy.

"The owner of the building ... should be hanged to death and compensation should be given to the injured and those who died," said the labour leader, Moshrefa Mishu. "A healthy and safe atmosphere should be made in the factories."

About 20 people were injured on Tuesday as police fired tear gas, rubber bullets and water cannons to disperse protesters in Savar, who were calling for the death penalty for the owners of the building and factories.

The building's owner, Mohammed Sohel Rana, and his father, Abdul Khalek, are among eight people arrested so far, and police are seeking a fifth factory boss, the Spanish citizen David Mayor, although it was unclear whether he was in Bangladesh at the time of the accident.

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Name: Hassan Mohsen Elhais

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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.”

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Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

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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 

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