Russia's President Vladimir Putin declared the annexation of four regions of Ukraine on Friday, defying an international outcry to claim the occupied areas as part of the Russian motherland.
The Kremlin said attacks on Luhansk, Donetsk, Zaporizhzhia and Kherson would in future be regarded as attacks on Russia, but refused to say whether it would retaliate with nuclear weapons.
Western leaders swiftly condemned the annexations as illegal. The US and Britain announced new sanctions, while Ukraine countered with a surprise announcement that it was applying to join Nato.
In a speech at an opulent Kremlin hall, Mr Putin said the four regions would not be up for discussion in any peace talks with Ukraine.
“People from Kherson, Donetsk, Luhansk and Zaporizhzhia become our citizens for ever,” he told dignitaries before he signed the acts of annexation.
“There is nothing stronger than the decisive will of millions of people who, according to their culture, to their language, believe they are part of Russia.”
Friday’s ceremony came after so-called referendums organised by Russian officials purportedly gave backing to the annexation in what Ukraine and its allies dismissed as a charade.
The four regions make up about 15 per cent of Ukraine’s internationally recognised territory. Russian troops occupy nearly all of Luhansk and Kherson, while Ukrainian forces have footholds in Donetsk and Zaporizhzhia.
In a combative speech filled with grievances with the West, Mr Putin:
· Said that Russia will defend its land “with all our strength and all our means”;
· Bemoaned the collapse of the former Soviet empire but said Russia was not seeking to restore the USSR;
· Defended the invasion of Ukraine despite Russian setbacks on the battlefield;
· During a diatribe against western hegemony, accused the US and its allies of being behind the mysterious Nord Stream gas leaks.
After signing the documents, Mr Putin shook hands with leaders of the four regions while the national anthem was played, before the five men clasped hands and chanted “Russia, Russia”.
“After the collapse of the USSR, the West decided that the world would forever have to put up with its diktats … but Russia has been reborn and strengthened,” Mr Putin said.
Nato and western powers said they would never recognise the land grab, described by Estonian Prime Minister Kaja Kallas as the most serious escalation of the conflict since Russia invaded Ukraine in February.
“Putin has mobilised hundreds of thousands of more troops, engaged in irresponsible nuclear sabre-rattling and now illegally annexed more Ukrainian territory,” Nato chief Jens Stoltenberg said in remarks on Friday.
“Together, this represents the most serious escalation since the start of the war. This land grab is illegal and illegitimate.
“Nato allies do not and will not recognise any of this territory as part of Russia. We call on all states to reject Russia's blatant attempts at territorial conquest. These lands are Ukraine's.”
US President Joe Biden described Mr Putin's actions as “phoney claims of annexation” and said Russia was “showing its contempt for peaceful nations everywhere”.
“Make no mistake: these actions have no legitimacy. The United States will always honour Ukraine’s internationally recognised borders,” he said.
Mr Biden and others promised they would remain undeterred by Russia's attempt to raise the stakes of a Ukrainian counter-attack.
“The strategy of seeking to falsely present Ukraine's territory as Russia's and purporting that the war may now be taking place on Russia's territory will not shake our resolve,” a joint statement from leaders of the EU said.
Vladimir Putin annexes four regions of Ukraine — in pictures
UN Secretary General Antonio Guterres called Russia’s move a breach of the UN Charter, while Britain’s Prime Minister Liz Truss said Mr Putin was showing “disregard for the lives of the Ukrainian people he claims to represent”.
“Putin cannot be allowed to alter international borders using brute force. We will ensure he loses this illegal war,” Ms Truss said.
Mr Biden said new sanctions would target those who provided political or economic support for Russia's attempted annexations. He said the US would continue to help Ukraine by “strengthening its hand militarily and diplomatically”.
Britain separately announced an export ban on hundreds of goods and said Russia would be denied access to services such as engineering, architecture and certain legal advice from the UK.
The measures are designed to bring the weight of London's powerful service sector to bear and “disrupt and degrade the capability of Russian businesses to keep pace in the international market”, the Foreign Office said.
Foreign Secretary James Cleverly said Russia “must be held to account for this abhorrent violation of international law”.
In Kyiv, Ukrainian President Volodymyr Zelenskyy mirrored Mr Putin's ceremonies by signing documents on Ukraine's Nato application. He said Ukraine was seeking an accelerated accession after proving itself up to Nato standards during the war.
“De facto, we have already made our way to Nato,” Mr Zelenskyy said after meeting defence and security chiefs on Friday. “Today, Ukraine is applying to make it de jure.”
Ukraine's long-standing ambition to join Nato is a prime grievance for Russia and was one of the reasons behind the invasion in February.
Donetsk and Luhansk together make up the coal-rich, largely Russian-speaking Donbas region where fighting has raged since 2014. Mr Putin cited the defence of Russian speakers there as one of his justifications for invading Ukraine.
Kherson lies just north of the Crimean peninsula annexed by Russia in similar fashion in 2014. Zaporizhzhia became the centre of international attention after shelling near a large nuclear power plant.
The move to annex the four regions comes a week after Mr Putin announced the partial mobilisation of Russian civilians, in what Ukraine’s allies described as a sign the invasion was going badly.
British intelligence reported on Friday that some of the newly mobilised reservists had been told to source their own medical supplies because of equipment shortages.
The European Union accused Russia of carrying out a “heinous attack” on a civilian convoy in southern Ukraine. Local authorities said 25 people were killed.
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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