United States banking sanctions due to be reintroduced on Iran next week will not only target government activities but also businesses in Europe and elsewhere that could face “secondary sanctions” if found in violation of US laws.
US officials have confirmed that on Monday, financial sanctions previously relaxed under the Iran nuclear deal in 2015 will be reintroduced following president Donald Trump’s withdrawal from the agreement on May 8.
These will include Iranian government purchases or trade in US banknotes, gold, precious metals, graphite, coal and semi-finished metals, as well as sanctions on large sales of Iranian rials, on issuing Iranian debt and auto sanctions.
The next wave of sanctions to be reimposed on November 4 will target the energy, shipping and insurance sectors, and the central bank of Iran.
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Along with the new sanctions, the US Treasury will enforce “secondary sanctions”, which will target businesses for transactions that go through the US and are in violation of the restrictions. The threat of these measures has already forced many companies and banks to withdraw business from Iran in anticipation of Monday.
Matthew Levitt, the director of counter-terrorism and intelligence programme at the Washington Institute for Near East Policy, told The National that the impact of the sanctions is already being felt in the plunge of the rial, and with the flight of reputable businesses from Iran. The rial hit a new low of 111,000 to the US dollar on Sunday.
“Because of the secondary sanctions, Iran’s ability to plug into the international system will be constrained” Mr Levitt said. While US trade with Iran stood at $258 million (Dh948m) in 2016 according to the US Census Bureau, the European Union alone exported $13 billion to Iran last year.
Mr Levitt, who worked previously at the US Treasury department, is confident that European businesses will avoid risk and avoid any transactions with Iran that could cut their access to the US financial system.
“Iran may not implode but its economy will be on life support” said Mr Levitt, pointing to corruption within Iran that will ultimately get worse without the international cover of the Joint Comprehensive Plan of Action.
Mr Levitt cautioned that “sanctions are not a policy, they are a tool to achieve what [US Secretary of State] Mike Pompeo asked Iran” in his speech in May presenting Iran with 12 demands that would dramatically shift its regional and internal behaviour. It is unclear, he added, if such goal will be achieved.
But Richard Nephew, a non-resident senior fellow at the Brookings Institution and a former Principal Deputy Co-ordinator for Sanctions Policy at the State Department, doubts the impact.
"The impact of those particular sanctions will be minimal, as the transfer of banknotes tends to be something that big institutions have already avoided and small transactions will take place under the radar," Mr Nephew told The National.
He argued that “much of the impact on the rial, civil air, and the automotive industry is baked in already,” as large businesses have cut ties in the last three months or avoided Iran altogether before the deal was put in place.
Total, Peugeot, General Electric, Boeing, Hyundia, Mazda, IndusInd Bank, and other major companies have left Iran or asked their investors to do so before the return of US sanctions.
Mr Nephew saw the biggest impact of Monday’s sanctions as "putting an end to some wishful thinking in the markets that the withdrawal [from the nuclear deal] decision could be reversed” by the Trump administration.
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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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A mark of Chatham House’s influence 100 years on since its founding, was Moscow’s formal declaration last month that it was an “undesirable
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The depth of knowledge and academics that it drew on
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- Priority access to new homes from participating developers
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- Mortgages with better interest rates, faster approval times and reduced fees
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Know your Camel lingo
The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home
Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless
Asayel camels - sleek, short-haired hound-like racers
Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s
Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival
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