Chinese President Xi Jinping during his visit to Saudi Arabia on Thursday. Photo: Saudi Royal Court / EPA
Chinese President Xi Jinping during his visit to Saudi Arabia on Thursday. Photo: Saudi Royal Court / EPA
Chinese President Xi Jinping during his visit to Saudi Arabia on Thursday. Photo: Saudi Royal Court / EPA
Chinese President Xi Jinping during his visit to Saudi Arabia on Thursday. Photo: Saudi Royal Court / EPA

China seeks to tone down 'backfired' diplomacy, US official says


  • English
  • Arabic

China’s assertive diplomacy has “backfired” and Beijing is now seeking a more predictable relationship with the US as the Asian country's economy slows and the government loosens its Covid-19 curbs, Washington's top Asia official said on Thursday.

Elements of China’s aggressive “wolf warrior” diplomacy have clearly been unsuccessful, said Kurt Campbell, the White House's co-ordinator for the Indo-Pacific region.

Mr Campbell said attempts to challenge Japan over islands in the East China Sea and engage in military confrontations with India in Himalayas hurt Beijing’s standing in the world.

“They’ve taken on and challenged many countries simultaneously — whether it’s, you know, Japanese waters around the Senkakus, issues associated with India’s border areas, other exploits that suggest perhaps a more ambitious China,” Mr Campbell said at the Aspen Security Forum in Washington.

“I think they recognise that that has, in many respects, backfired.”

Mr Campbell’s comments are among his most detailed since Chinese President Xi Jinping and President Joe Biden met on the sidelines of a Group of 20 summit in Bali, Indonesia, in November.

He said that Washington and Beijing wanted to stabilise ties, especially with their militaries operating in close proximity in Asia.

“As our forces rub up against one another, we want a greater degree of predictability and communication between Beijing and Washington,” Mr Campbell said.

“The last thing that the Chinese need right now is an openly hostile relationship with the United States. They want a degree of predictability and stability, and we seek that as well.”

Mr Campbell said that the coming months would see the “resumption of some of the more practical, predictable elements” of great-power diplomacy.

US Secretary of State Antony Blinken, who was part of the meetings in Bali, is set to head on an official diplomatic visit to China in early 2023 — a trip that was announced after Mr Xi and Mr Biden met.

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

Updated: December 08, 2022, 9:38 PM