The Central Bank of the UAE is extending support measures aimed at helping lenders mitigate the effects of the Covid-19 pandemic by six months until mid-2022 to back the country's continued economic recovery.
Relief measures related to banks' capital buffers, liquidity and stable funding requirements will be extended until June 30 for all lenders operating in the UAE, the banking regulator said in a statement on Saturday. The measures are part of the targeted economic support scheme (Tess) programme that it introduced at the start of the pandemic in 2020.
"As the recovery is gaining momentum, the CBUAE has adjusted the TESS, replacing measures designed to mitigate the immediate negative effects of the pandemic with targeted steps to support the economic recovery," Khaled Balama, governor of the Central Bank of UAE, said. "The Tess programme has proven its effectiveness in supporting the UAE financial system and economy throughout the pandemic."
The UAE introduced economic stimulus worth Dh388 billion ($105.72bn) since the pandemic tipped the world economy into its worst recession since the 1930s. These packages include Dh50bn under the central bank's Tess programme to boost liquidity in the financial and banking sector.
The extended capital buffer measures include temporarily lowering the capital conservation buffer and the capital buffer for "systemically-important" domestic banks, according to the statement. Liquidity measures consist of temporary prudential relief on the liquidity coverage ratio, eligible liquid assets ratio, net stable funding ratio, and advances to stable resources ratio.
Earlier this year, the central bank said the loan repayment deferral component of the Tess programme would end on December 31, 2021, marking the first phase of its gradual exit strategy from the measures implemented during the pandemic. The Tess programme to support new lending and financing will continue until June 30, 2022.
"The CBUAE’s gradual exit strategy from the Tess balances the winding-down of Tess measures with its continued commitment to support the UAE’s recovery," the regulator said in the statement.
Further support measures introduced during the pandemic that temporarily remain in effect include the reduced cash reserves requirement and the decrease in the required down payment for new mortgage loans.
In September, the Central Bank underscored its commitment to support the country's continued economic recovery and said the withdrawal of support measures will be gradual and well timed.
The UAE’s financial system as stable and that liquidity in the banking system and banks’ capital buffers were adequate, it said at the time.
The UAE economy has bounced back strongly from the coronavirus-driven slowdown, boosted by fiscal and monetary support and other measures from the government. The Arab world’s second-largest economy is now forecast to grow 2.1 per cent this year, after contracting 6.1 per cent in 2020 as a result of the global economic slowdown.
The economy is expected to grow at 4.2 per cent in 2022, higher than the 3.8 per cent previously forecast, according to the CBUAE's second quarter review.
Earlier this month, the central bank said that the UAE's economic recovery is expected to strengthen further in 2022 and the country's banking system has the capacity to support the financial system and its growth.
The UAE’s banking assets are expected to grow by between 8 per cent and 10 per cent in 2022 as the UAE economy continues to recover from the pandemic-driven slowdown and reap the benefits of hosting Expo 2020 Dubai, Abdulaziz Al Ghurair, chairman of UAE Banks Federation said in October.
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BBC business reporters, like a new raft of government officials, are being removed from the national and international hub of London and surely the quality of their work must suffer.
EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
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Global state-owned investor ranking by size
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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South Korea
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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.
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