A bridge connecting the cities of Lysychansk and Severodonetsk in the eastern Ukrainian region of Donbas, destroyed to slow the Russian advance. AFP
A bridge connecting the cities of Lysychansk and Severodonetsk in the eastern Ukrainian region of Donbas, destroyed to slow the Russian advance. AFP
A bridge connecting the cities of Lysychansk and Severodonetsk in the eastern Ukrainian region of Donbas, destroyed to slow the Russian advance. AFP
A bridge connecting the cities of Lysychansk and Severodonetsk in the eastern Ukrainian region of Donbas, destroyed to slow the Russian advance. AFP

Russian encirclement of key Donbas city Severodonetsk ‘inevitable’


Thomas Harding
  • English
  • Arabic

Russia will “inevitably” surround and defeat a pocket of Ukrainian troops in part of Donbas, western officials have said.

But the offensive could push into the winter months, with Ukrainian troops fighting every step until the area, centred on the city of Severodonetsk, ultimately falls to Russia.

Officials believe that even if the Ukrainian forces are encircled and cut off from supplies they will fight with the same determination as that shown by their comrades in Mariupol.

The number of Ukrainian forces thought likely to be trapped is unknown, but about 300,000 civilians are in the area.

During a briefing with journalists, the official was asked by The National if reports of Ukraine being surrounded in Donbas were accurate.

“The Russians have now reorientated and moved their troops around in order to advance … to incrementally gain the territory in order to close that pocket,” he replied. “It’s our view that once they have joined up, no further aid will get into that group.”

The Russian capture of the area will happen “incrementally over time” he said, and “that pocket is a more achievable goal for the Russians”.

With Ukraine forces cut off it would be difficult to get arms and ammunition into the area through the “rat runs” currently used for supplies.

A Ukrainian main battle tank drives on a street during nearby mortar shelling in Severodonetsk, eastern Ukraine, on May 18, 2022, on the 84th day of the Russian invasion of Ukraine. AFP
A Ukrainian main battle tank drives on a street during nearby mortar shelling in Severodonetsk, eastern Ukraine, on May 18, 2022, on the 84th day of the Russian invasion of Ukraine. AFP

But being surrounded did not necessarily mean the Russians would be victorious.

“Once they’re encircled I’d emphasise that does not mean defeat for the Ukrainians. They will fight on and they have shown that they’ll fight on through their efforts in Mariupol.”

The cut-off troops would also perform a “vital function” because they would “degrade the Russian forces and create time for the remainder of Ukrainians to develop further defensive positions”, the official said.

Once the Russians had taken the pocket they will then focus on the bigger prize of Kramatorsk, the official said.

“It has always been the case that Russia has more mass and more capability than their Ukrainian counterparts.”

Following their failures around Kyiv and Kharkiv, the Russians had “narrowed” their ambitions, to take a smaller area, the official said.

But he warned the current Russian offensive would be relentless. “It’s inevitable that Russians having secured the Severodonetsk pocket they will then try and move on Kramatorsk … that that will be the next goal for them.”

He said the Russians were still losing lots of drones and were attempting to mobilise men aged over 40 to fill the ranks of the estimated 15,000 dead they have suffered.

If the Russians take too long in taking the Severodonetsk pocket, “their forces will suffer further losses and if it was getting to the winter months, that's a different proposition,” he said.

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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Updated: May 23, 2022, 7:28 PM