A rally against the Northern Ireland protocol in the Newtownards Road in east Belfast. Photo: PA
A rally against the Northern Ireland protocol in the Newtownards Road in east Belfast. Photo: PA
A rally against the Northern Ireland protocol in the Newtownards Road in east Belfast. Photo: PA
A rally against the Northern Ireland protocol in the Newtownards Road in east Belfast. Photo: PA

EU set to offer Brexit compromise in Northern Ireland stand-off


Tim Stickings
  • English
  • Arabic

The EU will seek to resolve its Brexit stand-off with Britain on Wednesday by setting out proposals for a compromise over Northern Ireland.

EU commissioner Maros Sefcovic is expected to give ground in a speech later by signalling that fewer checks will be needed on goods crossing the Irish Sea.

But his proposals may fall short of the demands set out on Tuesday by British negotiator David Frost, who wants EU judges to lose their oversight role.

Mr Frost wants the Northern Ireland Protocol replaced with an entirely new treaty, while the EU insists it will only tinker with the existing deal.

Brussels is not describing its proposals as an ultimatum but believes that negotiations could stretch into next year once they are tabled.

Under the protocol, goods are checked when they move from mainland Britain to Northern Ireland. It means they can then enter the Republic of Ireland, and therefore the EU, without further checks.

The idea is to prevent a hard border in Ireland that could stoke sectarian tensions. But Britain says the checks are excessive and imperilling the 1998 peace agreement in Northern Ireland.

Mr Sefcovic has promised to offer Northern Ireland more of a voice in how post-Brexit trade is managed, after tensions over the protocol led to the fall of the devolved government in April.

The EU commissioner is expected to propose that fewer checks will be necessary on goods entering Northern Ireland.

There are suggestions that the EU could offer reduced checks in exchange for access to UK surveillance databases that would allow monitoring of trade.

Mr Sefcovic has previously indicated that the EU is willing to change legislation to ensure no disruption of medical supplies into Northern Ireland.

But he is unlikely to budge on the issue of the European Court of Justice, which is the final arbitrator under the protocol.

European Commission vice-president Maros Sefcovic has shown no signs of budging on the issue of the European Court of Justice. Reuters
European Commission vice-president Maros Sefcovic has shown no signs of budging on the issue of the European Court of Justice. Reuters

Mr Frost used his speech on Tuesday to call for the ECJ to be replaced by an international arbitrator.

He repeated his threat that Britain could unilaterally suspend the protocol, under a provision known as Article 16 which covers “serious economic, societal or environmental difficulties".

Mr Sefcovic has described the threats as unhelpful and said there were no quick solutions to “an extremely complex situation”.

He has said that Northern Ireland could not remain in the EU’s single market, enabling frictionless trade with the Republic, without oversight from the ECJ.

Brexit tensions hung over a G7 summit in June at which UK Prime Minister Boris Johnson clashed with French President Emmanuel Macron over the deal.

Mr Macron expressed frustration that Britain wanted to renegotiate the protocol less than two years after Mr Johnson signed it.

But Mr Sefcovic appears to have persuaded EU colleagues to seek a compromise with what he said would be a “very far-reaching proposal”.

“I sincerely hope that this will be seen as such by our UK counterparts,” he said last week. He said he hoped for a solution by the start of next year.

Mr Frost said he was ready to discuss the proposals and would “consider them seriously, fully and positively”.

He defended the early renegotiation by telling the EU it had little to lose from changing the protocol.

“For the EU now to say that the protocol — drawn up in extreme haste in a time of great uncertainty — can never be improved upon, when it is so self-evidently causing such significant problems, would be a historic misjudgement,” he said.

“Northern Ireland is not EU territory. It is our responsibility to safeguard peace and prosperity in Northern Ireland, and that may include using Article 16 if necessary.”

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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Villains
Queens of the Stone Age
Matador

The Year Earth Changed

Directed by:Tom Beard

Narrated by: Sir David Attenborough

Stars: 4

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PROFILE OF SWVL

Started: April 2017

Founders: Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh

Based: Cairo, Egypt

Sector: transport

Size: 450 employees

Investment: approximately $80 million

Investors include: Dubai’s Beco Capital, US’s Endeavor Catalyst, China’s MSA, Egypt’s Sawari Ventures, Sweden’s Vostok New Ventures, Property Finder CEO Michael Lahyani

Updated: October 13, 2021, 4:42 PM