Russia’s invasion of Ukraine has clearly failed to be the swift conquest envisaged by President Vladimir Putin.
His troops, more than 7,000 of whom have died, remain mired in battles almost a month into the conflict. With more than 20,000 soldiers wounded and hundreds of vehicles destroyed, Mr Putin’s grand plans have stalled.
There may now be an effort to withdraw in a way that minimises the humiliation of Russia’s leader. He could also gamble on a renewed push for a swift conquest, or settle into a long war of bombardment and siege.
Peace deal
Negotiations are continuing. The most optimistic scenario could culminate in a deal in which Ukraine agrees to repeal its constitutional commitment to joining Nato.
It would also accept that territory annexed in 2014 – the separatist areas Crimea and Donbas – would be attached to Russia. In exchange, Moscow would withdraw all its troops to pre-invasion positions and end the fighting. Despite calls for compensation for the huge damage Russia has caused, it would fall on Ukraine’s friends and allies to pay the reconstruction bill, estimated at $500 billion.
Though this would be a clear defeat for all of Mr Putin’s war aims, he would still be able to contrive it as a victory by denying Ukraine’s Nato application and the formal acceptance of seized territories. He would also seek the lifting of some sanctions so this too could be conjured as a triumph.
It is possible that Ukraine would still be able to apply to join the EU but it would want copper-bottomed guarantees from allies for its future security if it rejects the Nato route.
Ukraine divided
Despite suffering setbacks and substantial losses in the past month, Russia is now fighting the war with a slow but methodical approach of heavy bombardment and steady advance.
It could soon take the key port of Mariupol, establishing a contiguous land bridge from Russia to the Crimea – one of Mr Putin’s core war aims.
Moscow could also break through from the east, taking Kharkiv and pushing out from Donbas, forcing Ukrainian forces to beyond the River Dnieper that runs from north to south.
With the capital Kyiv looking increasingly resilient and difficult to take, and his troops exhausted, Mr Putin might choose to end the war there. Essentially, there would be an east and west Ukraine, perhaps similar to Korea’s division after the armistice reached in 1953.
But a western-backed insurgency would be launched with equipment far more sophisticated than that used by the Taliban to defeat US-backed forces in Afghanistan.
Russia could retaliate by attacking military supply convoys and stepping up its campaign of cyber warfare. But that could bring escalation, with heavy counter-cyber strikes by America and Britain that have to date not be used.
Long war
Progress by Russia’s military has been slow, ponderous and inept. But Moscow’s commanders have learnt some tough lessons and will now methodically apply pressure on Ukraine’s military.
It will use massed artillery and its air force to pummel Ukraine’s strongholds into submission before moving ground troops in. It could be very much a repeat of the grim, bitter fighting that levelled Grozny in Chechnya.
Ukraine probably lacks the personnel and equipment to launch major counter-attacks, making it near impossible to force Russia out.
Both sides could slug it out over the summer months, always with the potential that the war might escalate sharply with the use of chemical weapons or the unlikely, but possible, nuclear strike.
Sanctions will begin to have significant effects on the Russian economy, potentially turning popular opinion against Mr Putin and resulting in his downfall. But that could well be wishful thinking and the war might simply grind on and on, with the West gradually losing interest while Russia holds its gains.
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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
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
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