• Denmark and Canada have ended the dispute over control of Hans Island, a tiny uninhabited outcrop in the Arctic. Alamy
    Denmark and Canada have ended the dispute over control of Hans Island, a tiny uninhabited outcrop in the Arctic. Alamy
  • Greenland Prime Minister Mute Bourup Egede, left, Denmark's Minister for Foreign Affairs Jeppe Kofod, center, and Canada's Minister of Foreign Affairs Melanie Joly share a three-way handshake after signing an agreement that will establish a land border between Canada and Denmark on Hans Island, an Arctic island between Nunavut and Greenland, Tuesday, June 14, 2022, in Ottawa. (Justin Tang / The Canadian Press via AP)
    Greenland Prime Minister Mute Bourup Egede, left, Denmark's Minister for Foreign Affairs Jeppe Kofod, center, and Canada's Minister of Foreign Affairs Melanie Joly share a three-way handshake after signing an agreement that will establish a land border between Canada and Denmark on Hans Island, an Arctic island between Nunavut and Greenland, Tuesday, June 14, 2022, in Ottawa. (Justin Tang / The Canadian Press via AP)
  • At the signing ceremony in Ottawa, the two sides formally announced a deal to split Hans Island and effectively create the first land border between Canada and Europe. AP
    At the signing ceremony in Ottawa, the two sides formally announced a deal to split Hans Island and effectively create the first land border between Canada and Europe. AP
  • Canadian Foreign Minister Melanie Joly, left, Danish Foreign Minister Jeppe Kofod, centre, and Greenland Prime Minister Mute Bourup Egede after the signing ceremony. AP
    Canadian Foreign Minister Melanie Joly, left, Danish Foreign Minister Jeppe Kofod, centre, and Greenland Prime Minister Mute Bourup Egede after the signing ceremony. AP
  • A group of Danish soldiers stand by the Danish flag on Hans Island, in this file picture. AFP
    A group of Danish soldiers stand by the Danish flag on Hans Island, in this file picture. AFP
  • Snow-covered Hans Island is uninhabitable, but the onset of global warming is bringing more ship traffic to the Arctic, and opening it up to fishing and resources exploration. Getty Images
    Snow-covered Hans Island is uninhabitable, but the onset of global warming is bringing more ship traffic to the Arctic, and opening it up to fishing and resources exploration. Getty Images

Canada and Denmark end decade-long Arctic ‘war’ over remote Hans Island


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Canada and Denmark on Tuesday ended their long-running “war” over a tiny uninhabited outcrop in the Arctic that has been waged with flags and good-natured gifts.

The two sides formally announced a deal to split Hans Island and effectively create the first land border between Canada and Europe at a signing ceremony in Ottawa with Canadian and Danish foreign ministers.

Dividing up the kidney-shaped island and resolving the 49-year benign impasse was held up as a model for peacefully resolving territorial disputes.

“The Arctic is a beacon for international co-operation, where the rule of law prevails,” Canadian Foreign Minister Melanie Joly told journalists.

“As global security is being threatened, it's more important than ever for democracies like Canada and Denmark to work together, alongside indigenous peoples, to resolve our differences in accordance with international law.”

The waggish row over Hans Island, measuring 1.3 square kilometres and situated between Ellesmere and Greenland, dated back to 1973, when a marine boundary was drawn between Canada and Greenland, part of the Danish kingdom.

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Danes and Canadians have visited the rock by helicopter over the past decades to lay claim to it, leading to diplomatic protests, online campaigns and even a Canadian call to boycott Danish pastries.

During those ministerial visits, each side would plant a flag and leave behind a bottle of whiskey or schnapps for the other to enjoy, along with comical notes.

“Many have called it the whiskey war. I think it was the friendliest of all wars,” Ms Joly said of the territorial dispute — which had drawn in no less than 26 foreign ministers over the decades — at a news conference with her Danish counterpart Jeppe Kofod.

Mr Kofod said that its resolution, however, comes at a time when “the ruled-based international order is under pressure” and democratic values “are under attack.”

“We see gross violations of international rules unfold in another part of the world,” he said, alluding to the war in Ukraine.

“In contrast, we have demonstrated how long-standing disputes can be resolved peacefully by playing by the rules,” Kofod said, adding that he hoped Canada and Denmark's experience will “inspire other countries to follow the same path.”

Hans Island, which measures 1.3 square kilometres and is situated between Canada and Greenland. Alamy
Hans Island, which measures 1.3 square kilometres and is situated between Canada and Greenland. Alamy

“This sends a strong signal: diplomacy and the rule of law actually works, and that great result can be achieved by following the rules.”

As they exchanged bottles on Tuesday, Ms Joly and Mr Kofod laughed off suggestions that Canada might join the EU now that the two share a land border.

Ms Joly quipped that a Canadian singer would surely enter the next Eurovision Song Contest, while Mr Kofod offered: “Welcome Canada to the European continent!”

Snow-covered Hans Island is uninhabitable, but the onset of global warming is bringing more ship traffic to the Arctic, and opening it up to fishing and resources exploration — although maybe not in the area of the island.

Arctic expert Michael Byers noted that “the island is so incredibly remote as to make it uneconomical to contemplate any serious activity there.”

Putting off resolution of this unusual territorial dispute, however, made for good political theatre in both countries, flaring up before elections.

“It was an entirely risk-free sovereignty dispute between two Nato allies over an insignificant, tiny island,” Mr Byers said.

Denmark had also feared that losing the ownership battle would undermine relations with Greenland, while Canada worried that a loss would weaken its negotiating position in a more consequential dispute with the United States over the Beaufort Sea, in far north-western Canada, believed to be rich in hydrocarbons.

More recently, Canadian Prime Minister Justin Trudeau “has not made Arctic sovereignty part of his brand,” in contrast to his predecessor, Mr Byers said. “So that reduced the temperature, at least from our side.”

“But most importantly, Russia invaded Ukraine, and that created an opportune moment to tell the world that responsible countries settle territorial disputes in a peaceful way,” he said.

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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.

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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.

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Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.

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Updated: June 15, 2022, 11:15 AM