An F-16 fighter jet approaches Incirlik airbase in Turkey, which has been accused of repeatedly flying over Greek territory. Reuters
An F-16 fighter jet approaches Incirlik airbase in Turkey, which has been accused of repeatedly flying over Greek territory. Reuters
An F-16 fighter jet approaches Incirlik airbase in Turkey, which has been accused of repeatedly flying over Greek territory. Reuters
An F-16 fighter jet approaches Incirlik airbase in Turkey, which has been accused of repeatedly flying over Greek territory. Reuters

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Europe

Turkey told to 'stop questioning' Greece's sovereignty in letter to UN

Ankara says military operations on southern borders do not threaten sovereignty of neighbours

The National

May 27, 2022

  • English
  • Arabic

Greece has told UN Secretary General Antonio Guterres that Turkey is directly challenging its sovereignty over islands in the Aegean Sea.

A four-page letter signed by Greece’s UN representative Maria Theofili accused Turkey of pursuing a hostile and “revisionist” policy that is destabilising the region, AP reported.

“Greece solemnly calls upon Turkey to stop questioning Greece’s sovereignty over its Aegean Islands, in particular through legally baseless and historically false assertions [and] to abstain from threatening Greece with war,” the letter said.

“Highly threatening acts by Turkey [include] repeated overflights of Greek territory by fighter jets in contravention to international law.”

Turkey's National Security Council, or MGK, said current and future military operations on its southern borders are not aimed at its neighbours' sovereignty but are necessary for Turkish security.

Greece and Turkey have been at odds for decades over sea boundaries. However, the disagreement was escalated in 2020 as oil and gas exploration in the eastern Mediterranean intensified.

Turkey is demanding that Greece demilitarise its eastern islands, maintaining the action is required under 20th century treaties that ceded sovereignty of the islands to Greece.

The Greek government calls the demand a deliberate misinterpretation and has accused Turkey, a fellow Nato member, of stepping up hostile actions in the area.

Dispute over drilling rights

The Greek-Turkish dispute largely centres around oil and gas drilling rights in the eastern Mediterranean, specifically around Greek islands near Turkey’s coastline.

A Turkish survey mission two years ago triggered a tense naval stand-off that western allies had warned ran the risk of turning into a military conflict.

In response to the energy crisis worsened by the war in Ukraine, Greece has pledged to temporarily reverse a move to phase out coal and step up hydrocarbon exploration along its western coastline.

Turkey's MGK statement followed President Recep Tayyip Erdogan's declaration on Monday that Ankara would soon launch new military operations on its southern borders to expand 30km deep safe zones and combat what he described as terrorist threats there.

Turkey President Recep Tayyip Erdogan said Ankara would soon launch new military operations on its southern borders to combat what he described as terrorist threats. AP
Turkey President Recep Tayyip Erdogan said Ankara would soon launch new military operations on its southern borders to combat what he described as terrorist threats. AP

Any operations are expected to focus on northern Syria, where Turkey has launched several incursions since 2016, mainly aimed at the US-backed Kurdish People's Defence Units, or YPG.

Ankara views the YPG as similar to the Kurdistan Workers’ Party, or PKK, a group that has been waging an insurgency in south-east Turkey since 1984. It designates both groups as terrorist organisations.

The YPG are a key element of the Kurdish-led coalition, which the US largely relied on to fight ISIS.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Tax authority targets shisha levy evasion

The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.

Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".

The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.

He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.

"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.

As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.

Company Profile

Company name: NutriCal

Started: 2019

Founder: Soniya Ashar

Based: Dubai

Industry: Food Technology

Initial investment: Self-funded undisclosed amount

Future plan: Looking to raise fresh capital and expand in Saudi Arabia

Total Clients: Over 50

UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

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While you're here
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 27, 2022, 6:17 AM
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