Ali Babacan, the Turkish foreign minister, left, escorts Eka Tkeshelashvili, the Georgian foreign minister, following their meeting in Istanbul on Sunday.
Ali Babacan, the Turkish foreign minister, left, escorts Eka Tkeshelashvili, the Georgian foreign minister, following their meeting in Istanbul on Sunday.
Ali Babacan, the Turkish foreign minister, left, escorts Eka Tkeshelashvili, the Georgian foreign minister, following their meeting in Istanbul on Sunday.
Ali Babacan, the Turkish foreign minister, left, escorts Eka Tkeshelashvili, the Georgian foreign minister, following their meeting in Istanbul on Sunday.

Ankara embarks on diplomacy in Caucasus


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ISTANBUL // Amid growing fears in Turkey that the country may be caught between the fronts of a new confrontation between Russia and the West, Ankara is stepping up its efforts to calm the conflict in the Caucasus, hosting the foreign ministers of both Georgia and Russia within 48 hours of each other. Eka Tkeshelashvili, Georgia's foreign minister, met her Turkish counterpart, Ali Babacan, in Istanbul on Sunday. Mr Babacan will host Sergey Lavrov, Russia's foreign minister, in Istanbul today. Elmar Memedyarov, the foreign minister of another Caucasus country, Azerbaijan, held talks with Mr Babacan last Friday. "To secure peace and stability in the Caucasus is vital for Turkey as a neighbour" bordering the region, Mr Babacan said after talks with Ms Tkeshelashvili. Mr Babacan and other Turkish politicians have been promoting a plan to create a regional "Caucasus Alliance" as an instrument for conflict prevention and resolution. After the recent fighting between Georgian and Russian forces in South Ossetia, Turkey's prime minister, Recep Tayyip Erdogan, held talks in Moscow, Tbilisi and Baku to drum up support for the alliance. Talks with Armenia, with which Turkey does not have diplomatic relations, are planned in the coming days. But Turkey may find it difficult to convince countries in the region to become part of a "Caucasus Alliance". Ms Tkeshelashvili said her government was reluctant to contemplate being in any sort of pact with Russia. "It is difficult for us to even think about signing any co-operation agreement in the region," she said. Despite its efforts to bridge the widening political gaps in the region with the "Caucasus Alliance", Turkey, a Nato member and an EU candidate geographically close to the Caucasus and heavily dependent on Russian oil and gas, may be forced to take sides in a new East-West conflict, observers said. Foreign policy analysts agree that the recent fighting in the Caucasus signalled the beginning of a new period, in which Turkey may be faced with tough choices. "Ossetia was the first attack of the Putin-Medvedev era," said Can Fuat Gurlesel, head of the Institute for Strategic Studies, a think tank in Istanbul. "It will go on." Cengiz Aktar, a political scientist, writing in the daily Vatan, said Turkey would have to state which side it was backing. "The period of transition after the Cold War is over and gives way to a new 'lukewarm war'," Mr Aktar wrote. There are signs that Turkey could soon be drawn into that new confrontation. Turkish media quoted the deputy chief of general staff of the Russian military, Gen Anatoly Nogovotsin, as saying that war ships from the United States and other Nato countries that are in the Black Sea, some with the task of bringing humanitarian aid to Georgia, must leave the area after 21 days. Gen Nogovotsin was referring to terms of the Montreux Treaty of 1936 that regulates maritime traffic through the Turkish Straits and limits the presence of war ships of countries that do not border the Black Sea. Gen Nogovotsin said if the Nato ships did not comply with the 21-day rule, "Turkey will be responsible". At the same time, trade relations between Turkey and Russia are showing signs of strain. Ankara has been complaining about what it sees as Russian efforts to hinder imports from Turkey by delays and inspections. Kursad Tuzmen, the foreign trade minister, threatened retaliatory measures against Russia. Turkish media reported yesterday that Turkish customs officials had begun to delay the entry of lorries carrying Russian goods. Mr Tuzmen acknowledged that Turkey was dependent on Russia in its oil and gas supply, saying that 40 per cent of oil and 60 per cent of gas imports came from Russia. Millions of holidaymakers from Russia are an important source of income for Turkey's tourism industry. But Mr Tuzmen said Russia was dependent on Turkey as a transit country for its own exports. He said Turkey was putting into place a "package of our own measures" against Russia in response to Moscow's treatment of Turkish goods. Mr Tuzmen also said Turkey was reconsidering its support for Russia's entry into the World Trade Organisation. Before the recent tensions, Turkey and Russia aimed to raise their bilateral trade volume to US$38 billion (Dh139.5bn), from $27bn last year. While its relations with Russia may be about to enter a bumpy stretch, Turkey also finds it difficult to act in complete solidarity with its partners in Nato and the EU. After the fighting in South Ossetia, politicians in Ankara stressed the importance of the territorial integrity of Georgia, but have refrained from the tough anti-Russian rhetoric that has marked some statements from other western governments. "The possibility that Ankara will be left alone, given the harsh political stance that will be adopted against Russia on Nato level, is growing steadily," wrote Semih Idiz, a foreign policy commentator for the Milliyet daily. Mr Idiz drew attention to calls by Romania, Bulgaria, Georgia and the Ukraine for an increased Nato naval presence in the Black Sea as a counterweight to Russia's Black Sea fleet. Turkey opposes such a build-up, pointing to the Montreux Treaty. "This example alone is enough to show how Turkey, which is stuck in the middle, will be in trouble in its own alliance in the near future," Mr Idiz wrote. Some observers think that the new era triggered by the conflict could force Turkey to re-evaluate its close ties to the West. Close neighbours such as Russia and Iran were resisting efforts by Nato and the West to impose their hegemony on wide regions of the world, commentator Ali Bulac wrote in the pro-government Zaman. As it was in Turkey's interest to have good relations with its neighbours, Ankara had to make a new political calculation, Mr Bulac said: "Friendlier relations with Nato or with the neighbours?" He provided the answer himself: "While not forgetting that it is a Nato member, Turkey must create new, trustworthy relations with its neighbours." tseibert@thenational.ae

Veil (Object Lessons)
Rafia Zakaria
​​​​​​​Bloomsbury Academic

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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

TOURNAMENT INFO

Women’s World Twenty20 Qualifier

Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November

UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi

Day 1, Dubai Test: At a glance

Moment of the day Sadeera Samarawickrama set pulses racing with his strokeplay on his introduction to Test cricket. It reached a feverish peak when he stepped down the wicket and launched Yasir Shah, who many regard as the world’s leading spinner, back over his head for six. No matter that he was out soon after: it felt as though the future had arrived.

Stat of the day - 5 The last time Sri Lanka played a Test in Dubai – they won here in 2013 – they had four players in their XI who were known as wicketkeepers. This time they have gone one better. Each of Dinesh Chandimal, Kaushal Silva, Samarawickrama, Kusal Mendis, and Niroshan Dickwella – the nominated gloveman here – can keep wicket.

The verdict Sri Lanka want to make history by becoming the first team to beat Pakistan in a full Test series in the UAE. They could not have made a better start, first by winning the toss, then by scoring freely on an easy-paced pitch. The fact Yasir Shah found some turn on Day 1, too, will have interested their own spin bowlers.