German Foreign Minister Annalena Baerbock attends a press briefing with the EU foreign policy chief Josep Borrell in Brussels. AP
German Foreign Minister Annalena Baerbock attends a press briefing with the EU foreign policy chief Josep Borrell in Brussels. AP
German Foreign Minister Annalena Baerbock attends a press briefing with the EU foreign policy chief Josep Borrell in Brussels. AP
German Foreign Minister Annalena Baerbock attends a press briefing with the EU foreign policy chief Josep Borrell in Brussels. AP

New German foreign minister Baerbock signals tougher stance on Russia


Tim Stickings
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Germany's new Foreign Minister Annalena Baerbock has put her critical stance towards Moscow on display, describing the Russian troop build-up near Ukraine as a threat to all of Europe's security.

Ms Baerbock, a co-leader of Germany's Green party, held talks with Nato chief Jens Stoltenberg on her first full day in office on Thursday, and told the Kremlin it would pay a high price if it invades Ukraine.

She separately told foreign ministry staff that Berlin needed to rethink its attitude towards countries such as Russia and China that seek to “gain advantages in ways we don't find acceptable".

Ms Baerbock visited Paris and Brussels on Thursday, in a symbol of Germany's steadfast alliances with France, the EU and Nato.

“Nato remains an indispensable pillar of security in Europe,” she told reporters after meeting Mr Stoltenberg at Nato headquarters in Brussels.

“The Russian troop development near Ukraine must concern us, with a view to Ukraine itself but also with a view to our security in Europe,” she said.

She called on Russia to hold talks with Nato, an offer which Mr Stoltenberg said had been made to Moscow but not accepted.

Speaking earlier in Paris, Ms Baerbock said Ukraine's territorial integrity and sovereignty were not negotiable for the new government in Berlin.

“Russia would pay a high political, and especially economic, price for any renewed attack on Ukrainian statehood,” she said at a press conference with French counterpart Jean-Yves Le Drian.

Ms Baerbock stressed continuity in Germany's traditional alliances with the US, France and the EU, but called for a greater emphasis on climate change and a more critical stance towards Moscow and Beijing.

While the previous government also criticised Russia over Ukraine and other issues, it was sometimes accused of an overly commerce-driven stance, and was criticised by Ms Baerbock for approving the Nord Stream 2 gas pipeline.

“We need to think more about how we get to grips with this reasoning of competition and antagonism,” she said of countries such as China and Russia.

Mr Stoltenberg said Germany’s support was more important than ever given the potential threat from Russia.

He said he agreed with Ms Baerbock that climate change could have implications for security policy. “This is a defining challenge of our time, and Nato is determined to adapt and mitigate the effects of global warming,” he said.

In talks with EU foreign policy chief Josep Borrell, she discussed the potential for more integration within the bloc. “The future of my country is forever embedded in the common European destiny,” she said.

She hopes to use Germany’s presidency of the G7 in 2022 to push for more international climate co-operation, a priority of the new government.

Ms Baerbock is Germany's first female foreign minister and the second from the Green party, which has joined the government for the first time in 16 years.

The coalition between the Social Democrats, Greens and Free Democrats took office on Wednesday, led by Chancellor Olaf Scholz.

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

Updated: December 09, 2021, 5:10 PM