The EU has warned Britain of “serious consequences” if the UK unilaterally suspends the controversial post-Brexit deal on Northern Ireland.
London and Brussels are at odds over trading arrangements which the UK says are too burdensome and are increasingly cutting Northern Ireland off from the mainland.
Britain has indicated that it will, if it deems necessary, use a procedure called Article 16 to suspend the deal.
But doing so would lead to “instability and unpredictability” in Northern Ireland, said Maros Sefcovic, the EU’s negotiator on Brexit issues.
It would also signal the “rejection of EU efforts to find a consensual solution” to the post-Brexit standoff, he said.
The tensions come amid a separate diplomatic dispute between Britain and France over fishing licences after Brexit.
Mr Sefcovic said a compromise on Northern Ireland he suggested last month, in which many checks on goods would be abolished, would make significant improvements.
He said it would effectively create an “express lane” that sidesteps the customs checks the UK describes as excessive.
“This was a big move by us. But until today, we have seen no move at all from the UK side,” Mr Sefcovic said.
“I find this disappointing and once again, I urge the UK government to engage with us sincerely.”
Limited progress
The UK government said the EU’s proposals were insufficient and described progress in Brexit talks as limited.
One point of contention is that Britain wants to scrap the European Court of Justice’s oversight of the deal, a move which Brussels opposes.
However, UK negotiator David Frost believes “gaps could still be bridged through further intensive discussions,” a Downing Street spokesman said.
Under the deal struck in 2019, goods are checked when they move to Northern Ireland so they are then clear to move on to the Republic of Ireland.
This avoids the need for a hard border on the island of Ireland, which is regarded by all sides as unacceptable because of the risk of reigniting sectarian tensions.
But unionists in Northern Ireland say it is becoming increasingly isolated from the British mainland because of the Irish Sea trade border.
Sir Jeffrey Donaldson, the leader of the Democratic Unionist Party, told the EU to put Northern Ireland’s interests first.
He said Mr Sefcovic’s warning of serious consequences was intemperate and ill-advised.
“They ought to recognise that the protocol and its Irish Sea border is causing economic harm and undermining stability in Northern Ireland,” he said.
“It is time the interests of Northern Ireland were put first by the EU rather than behaving in a manner which has brought us to the brink.”
Mr Donaldson said it was the trading protocol, not the potential invocation of Article 16, that posed a threat to stability in Northern Ireland.
But Sir John Major, a former UK prime minister who was in power during part of the 1990s peace process in Northern Ireland, said suspending the pact would be absurd.
“I think it would be colossally stupid to do that,” he told BBC Radio 4’s Today programme.
He criticised Mr Frost and Prime Minister Boris Johnson for seeking to renegotiate the pact agreed only two years ago.
“The protocol is being denounced week after week by Lord Frost and the Prime Minister,” said Mr Major. “Who negotiated the wretched protocol? Lord Frost and the Prime Minister.”
CREW
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Ipaf in numbers
Established: 2008
Prize money: $50,000 (Dh183,650) for winners and $10,000 for those on the shortlist.
Winning novels: 13
Shortlisted novels: 66
Longlisted novels: 111
Total number of novels submitted: 1,780
Novels translated internationally: 66
The biog
Born: near Sialkot, Pakistan, 1981
Profession: Driver
Family: wife, son (11), daughter (8)
Favourite drink: chai karak
Favourite place in Dubai: The neighbourhood of Khawaneej. “When I see the old houses over there, near the date palms, I can be reminded of my old times. If I don’t go down I cannot recall my old times.”
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
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
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Company name: baraka
Started: July 2020
Founders: Feras Jalbout and Kunal Taneja
Based: Dubai and Bahrain
Sector: FinTech
Initial investment: $150,000
Current staff: 12
Stage: Pre-seed capital raising of $1 million
Investors: Class 5 Global, FJ Labs, IMO Ventures, The Community Fund, VentureSouq, Fox Ventures, Dr Abdulla Elyas (private investment)
