Polish Prime Minister Mateusz Morawiecki and European Commission President Ursula von der Leyen. Mr Morawiecki believes the EU is overreaching in its influence over member states. Reuters
Polish Prime Minister Mateusz Morawiecki and European Commission President Ursula von der Leyen. Mr Morawiecki believes the EU is overreaching in its influence over member states. Reuters
Polish Prime Minister Mateusz Morawiecki and European Commission President Ursula von der Leyen. Mr Morawiecki believes the EU is overreaching in its influence over member states. Reuters
Polish Prime Minister Mateusz Morawiecki and European Commission President Ursula von der Leyen. Mr Morawiecki believes the EU is overreaching in its influence over member states. Reuters

EU law row with Poland dominates Brussels summit


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Fears that the EU's very foundations and cohesion are being threatened by a Polish rejection of Brussels' legal supremacy overshadowed a summit of the bloc's leaders on Thursday.

The gathering — originally called to examine ways for Europe to cope with a global energy crunch — exposed deep east-west divisions and dug-in positions that presaged an escalating confrontation in the months ahead.

The seriousness of the row was voiced by several leaders as they arrived, with most emphasising “dialogue” to defuse the situation before it blew up into a political and legal crisis.

“It's very clear that a red line has been crossed,” said Belgian Prime Minister Alexander De Croo.

It was “a shame”, he said, that so much summit time had to be taken up on the matter, but it was necessary “because this discussion really goes to the heart of Europe".

Dutch Prime Minister Mark Rutte and his Finnish counterpart Sanna Marin both said they had to get “tough” with Warsaw, while Austria's Chancellor Alexander Schallenberg said Poland cannot “cherry-pick” EU laws.

Several leaders said Brussels should not release 36 billion euros ($42 billion) in pandemic-recovery money that Poland badly wants while the issue was unresolved.

A few said all EU budget money for Warsaw should be subject to an untested “conditionality” mechanism tying disbursement to member states upholding rule of law.

As he arrived, Polish Prime Minister Mateusz Morawiecki showed no sign of backing down.

While he said he was “ready for dialogue” he stated: “We won't act under the pressure of blackmail.”

He stood by an October 7 ruling by his country's Consitutional Court that declared EU law could only apply in a few, specific areas, with Polish law prevailing in all other national matters.

EU leaders, officials and diplomats see that verdict as a gambit to justify moves by Mr Morawiecki's populist government to get rid of independent judges and replace them with ones controlled by his ruling Law and Justice (PiS) party. They accuse Warsaw of rolling back EU democratic norms.

Mr Morawiecki reiterated his belief that the EU was overreaching in its influence over member states, trampling their sovereignty in a way that would lead to “anarchy” and “chaos” if unchecked.

He found support from Hungarian Prime Minister Viktor Orban, who called the pressure on Poland a “witch-hunt”.

“The Poles are right,” he said, and added that “we are going to support the Poles — there is a devious abuse of authority happening".

In a bid to head off the dispute careening out of control, key leaders hastily organised one-on-one meetings with Mr Morawiecki in the two hours before the summit started.

French President Emmanuel Macron — who spoke with the Polish leader as soon as both touched down at Brussels airport — urged Mr Morawiecki to enter dialogue “to find a solution in line with our principles and common rules,” an Elysee official said.

German Chancellor Angela Merkel and Spanish Prime Minister Pedro Sanchez followed up with their own separate meetings.

European Commission chief Ursula von der Leyen, who publicly clashed with Mr Morawiecki on the issue this week on the same podium in the European Parliament, said the Polish ruling added “a new dimension” to the dispute over rule of law.

“We all have to take a responsibility when it comes to protecting our fundamental values,” said Ms von der Leyen, who heads the executive tasked with protecting the EU's treaties.

The summit's convener, European Council President Charles Michel, emphasised the need to find a solution.

“We are firm on the principles of rule of law. We feel that we have tools — legal tools, institutional tools — that we should use. But we think also that we must be committed to the dialogue,” he said.

Ms Merkel — attending what could be her last EU summit before handing Germany's reins over to a new government following September elections she did not contest — said she did not want to see the row end up before the European Court of Justice.

“A cascade of legal disputes before the European Court of Justice is not a solution to the problem of how the rule of law can be applied,” she said.

The European Parliament, however, is already gearing up for legal action to force the Commission to use the conditionality mechanism on Poland.

But the Commission is taking its time. It stresses that a high burden of proof is needed if the matter goes to court.

Already the European Court of Justice is using an expedited procedure to decide the legality of the mechanism itself.

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2012-2015

The company offers payments/bribes to win key contracts in the Middle East

May 2017

The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts

September 2021

Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act

October 2021

Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence 

December 2024

Petrofac enters into comprehensive restructuring to strengthen the financial position of the group

May 2025

The High Court of England and Wales approves the company’s restructuring plan

July 2025

The Court of Appeal issues a judgment challenging parts of the restructuring plan

August 2025

Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision

October 2025

Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange

November 2025

180 Petrofac employees laid off in the UAE

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  • Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
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  • By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
  • Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
  • Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.

 

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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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US households add $601bn of debt in 2019

American households borrowed another $601 billion (Dh2.2bn) in 2019, the largest yearly gain since 2007, just before the global financial crisis, according to February data from the New York Federal Reserve Bank.

Fuelled by rising mortgage debt as homebuyers continued to take advantage of low interest rates, the increase last year brought total household debt to a record high, surpassing the previous peak reached in 2008 just before the market crash, according to the report.

Following the 22nd straight quarter of growth, American household debt swelled to $14.15 trillion by the end of 2019, the New York Fed said in its quarterly report.

In the final three months of the year, new home loans jumped to their highest volume since the fourth quarter of 2005, while credit cards and auto loans also added to the increase.

The bad debt load is taking its toll on some households, and the New York Fed warned that more and more credit card borrowers — particularly young people — were falling behind on their payments.

"Younger borrowers, who are disproportionately likely to have credit cards and student loans as their primary form of debt, struggle more than others with on-time repayment," New York Fed researchers said.

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Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.

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Updated: October 21, 2021, 3:28 PM