The European Union is under fire for its failure to disburse billions of euros of promised aid this year to war-ravaged Ukraine.
Czech Finance Minister Zbynek Stanjura said that he found it “very difficult to look Ukrainians in the eye” during a visit to Kyiv last week.
“It’s difficult to explain why we’re incapable of honouring the promises made by our heads of government [to disburse] the money by the end of the year,” Mr Stanjura said in Brussels on Tuesday evening.
“They have problems with infrastructure, the social security system, the budget,” he said.
The World Bank expects the Ukrainian economy to contract by 35 per cent in 2022.
Disagreements between EU member states over whether to provide the funds as grants or loans reportedly caused the postponement of €3 billion ($3.01bn) in aid to Ukraine to early next year. The funds are the final tranche of a €9 billion package the European Commission announced in May.
The delay has caused further strain to Ukraine’s finances. Ukrainian authorities told EU officials in early September that they were counting on receiving the delayed payment this year.
The delay has also caused frustration in the US.
US Treasury Secretary Janet Yellen last month pressed senior officials from the European Commission to step up financial assistance to Ukraine, according to the Washington Post. Ms Yellen has highlighted the need for direct cash payments instead of loans.
Mr Stanjura said that if the €3bn is disbursed in January 2023, then the delay would not be excessive.
He appealed to European countries to increase their help to Ukraine.
“The Ukrainians really need this money," he said.
But EU aid will cover only a fraction of Ukraine's needs. Ukraine's President Volodymyr Zelenskyy last month asked the international community to cover an expected budget deficit of $38 billion.
Meanwhile, French legislators on Tuesday doubled to €200 million a fund dedicated to military support to Ukraine.
European Commission executive vice-president Valdis Dombrovskis said that EU leaders had asked the commission to propose a more structural solution for assisting Ukraine.
The commission will on Wednesday present a proposal to provide €18bn in financial aid next year.
The new instrument would provide highly concessional loans to cover immediate needs, rehabilitation of critical infrastructure and initial support towards postwar reconstruction, people familiar with the proposal told Bloomberg.
The commission will seek approval from the European Parliament and the European Council before the end of this year. “It needs to be decided quickly, 2023 is approaching fast and Ukraine’s financing needs are urgent,” Mr Dombrovskis said.
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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
