Conservative leadership hopeful Rishi Sunak and former UK defence secretary Liam Fox attend a hustings event in Exeter, south-west England. AFP
Conservative leadership hopeful Rishi Sunak and former UK defence secretary Liam Fox attend a hustings event in Exeter, south-west England. AFP
Conservative leadership hopeful Rishi Sunak and former UK defence secretary Liam Fox attend a hustings event in Exeter, south-west England. AFP
Conservative leadership hopeful Rishi Sunak and former UK defence secretary Liam Fox attend a hustings event in Exeter, south-west England. AFP

Rishi Sunak to embrace 'maximum pressure' policy on Iran


Thomas Harding
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Conservative Party leadership candidate Rishi Sunak is better equipped than rival Liz Truss to run foreign affairs, particular in the Middle East, a former British defence secretary has told The National.

Liam Fox said Mr Sunak would make an effective prime minister owing to his strong position on Iran — backing a policy of imposing “maximum pressure” sanctions on Tehran before reviving the 2015 nuclear agreement, also known as the Joint Comprehensive Plan Of Action.

Mr Sunak is campaigning against Ms Truss, the UK Foreign Secretary, in the vote by about 150,000 party members to elect a new leader.

The winner, to be announced on September 5, will replace Boris Johnson as prime minister.

Mr Fox, who was the UK's defence secretary between 2010 and 2011, praised how the former chancellor of the exchequer handled the economy during the Covid-19 pandemic and said that proved he could remain calm in a crisis.

Mr Fox described why he believes Mr Sunak, who is trailing Ms Truss in polls, should be Br

itain's next leader and why he thinks a groundswell of support could carry the former chancellor to victory.

Liam Fox, left, with Rishi Sunak during a Conservative Party membership hustings in Exeter. Getty
Liam Fox, left, with Rishi Sunak during a Conservative Party membership hustings in Exeter. Getty

Tough on Iran

Mr Sunak is "more hawkish" on Iran than the UK Foreign Office and is sceptical about whether the nuclear deal can work, Mr Fox said.

“He would want to see maximum sanctions put on to see whether Iran could be persuaded or forced into a wider agreement that goes beyond just the nuclear programme," he said.

"He feels that we should get away from the failed European foreign policy.

“Ultimately, he regards Iran as a major threat to regional stability and beyond because its ballistic missile programme is in breach of the UN resolutions and continues apace.

“He believes the JCPOA doesn't actually stop Iran's nuclear programme it merely delays it making it a bit more difficult.”

Gulf opportunities

He said the former chancellor considered the Abraham Accords — signed by the UAE, Bahrain and Israel in 2020 — to be a positive step for the Middle East.

“Rishi’s view is that we need to work with countries who are functionally similar to us, who share our foreign policy and our global economic aspirations. He believes that the UAE is a very important partner in that," Mr Fox said.

“He also thinks the Abraham Accords are a very positive development for the countries involved and the region, but that the UK should be more engaged in the region than we have been.

“We need to be looking to see whether we can improve our joint investment profile. It’s all very well to have trade, but you need to have trade and investment.

"You need to be looking at not just what you sell to one another, but how you can create a more viable partnership using joint ventures to create a more robust sharing of capabilities.”

Cool in a crisis

Mr Sunak is a "decision taker and very good at weighing up a situation", he said.

"The decision he made in the pandemic proved this when he introduced the furlough scheme, which the IMF [International Monetary Fund] described as one of the best in the world," he said.

"His decision was taken very quickly with a good database. His general demeanour is that he likes to take decisions based on empirical data.”

Former chancellor to the exchequer Rishi Sunak has been praised for how he handled the economy during the pandemic. Getty
Former chancellor to the exchequer Rishi Sunak has been praised for how he handled the economy during the pandemic. Getty

Strong support for Brexit

The former defence secretary also praised Mr Sunak for backing the UK's exit from the EU, with Mr Truss opposed to the move initially.

“He was a Brexiteer because he believed that Europe was restricting Britain's horizons," he said.

"Britain needs to look for economic and security partnerships beyond its immediate, geographical boundaries. That's one of the positions I strongly support because I've always had that view too.

"I think that he also believes that we need to be taking that into our foreign policy decisions too.”

UK relations with US

Mr Sunak "knows the United States well as he’s lived in the US", Mr Fox said.

"He’s also got people like me supporting him — who is chairman of Conservative Friends of America and who know the American political system extremely well — so he would have a pretty good head start in all of that.”

Trailing in the polls

He said there was "something off going on" with polls that showed Mr Sunak behind his leadership rival.

“There’s a disconnect to what we're finding on the ground and what’s in the polls, in that there is a groundswell of support for Rishi," he said.

"The leadership contest is very, very difficult to call because there is no database for polling companies confirming whether someone is a member of the Conservative Party or not. It’s still all to play for in the election of the next Conservative leader.”

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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Updated: August 25, 2022, 1:27 PM