French President Emmanuel Macron is pushing Lebanon's political leaders to install an interim government able to enact reforms, win back public confidence and persuade donors to release billions of dollars in aid.
A Lebanese government source told Reuters that he wants two-time former prime minister Saad Hariri to head this government.
The cost of rebuilding Beirut is estimated at up to $30 billion, money Lebanon does not have. Mr Macron wants to use this as leverage for his reforms.
The French president made his zeal for change clear when he visited Beirut in the aftermath of the devastating port explosions in early August.
“We must today proceed with reforms to change the system to stop the division of Lebanon, to fight against corruption, to have transparency and truth. This explosion is the consequence of negligence," he said.
Mr Macron is seeking a coalition of international support for his mediation, and has already spoken to Russia and Iran – which both have ties to armed Shiite group Hezbollah.
American support will also be crucial, both at a geopolitical level and within the International Monetary Fund. Lebanon entered talks with the IMF in May after defaulting on foreign currency debt but the negotiations stalled in the absence of reforms.
Obstacles in the path of regime change
Moves by the French leader to intercede in the divided country will be welcomed by the supporters who mobbed Mr Macron on his visit to Beirut – with one man telling him: “We don't want the [aid money] to go to our government." But the task won’t be straightforward.
Suspicions Mr Macron is seeking undue influence prevail, and a senior Lebanese politician source told Reuters that the French head of state is acting as a de facto president.
Lebanese President Michel Aoun and the country's Christian parties are said to oppose Macron's proposal, according to the source.
If Lebanon's factions won't eventually bend to donors' demands, French lawmaker Loic Kervran, who chairs the France-Lebanon committee, said sanctions could be imposed, including asset freezes or travel bans on the elite, some of whom own upmarket property in Paris.
"Lebanese politicians travel a lot, and they travel a lot to Paris," Mr Kervran said. "It's an important pressure tool."
Tips for SMEs to cope
- Adapt your business model. Make changes that are future-proof to the new normal
- Make sure you have an online presence
- Open communication with suppliers, especially if they are international. Look for local suppliers to avoid delivery delays
- Open communication with customers to see how they are coping and be flexible about extending terms, etc
Courtesy: Craig Moore, founder and CEO of Beehive, which provides term finance and working capital finance to SMEs. Only SMEs that have been trading for two years are eligible for funding from Beehive.
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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
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