A man receives food, distributed by army troops in the flood-hit area of Rajanpur in Punjab, Pakistan, on August 27. AP
A man receives food, distributed by army troops in the flood-hit area of Rajanpur in Punjab, Pakistan, on August 27. AP
A man receives food, distributed by army troops in the flood-hit area of Rajanpur in Punjab, Pakistan, on August 27. AP
A man receives food, distributed by army troops in the flood-hit area of Rajanpur in Punjab, Pakistan, on August 27. AP


Countries need better infrastructure for climate disasters


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August 29, 2022

Around the world, the indiscriminate effects of climate change and erratic weather events have been sharply felt over the years. The past few months have been particularly significant. Over the summer, these events have continued to take a devastating, if unequal, toll on human lives. Countries with very different climatic conditions and topographies are bearing a similar burden: the damage control caused by extensive weather-related destruction.

There is a regularity to the reports of deaths and economic and humanitarian distress to people in all four hemispheres of the world. Just this year, the list has included: drought in England, heatwaves in mainland Europe, wildfires over the past two months in Spain, France, Portugal; the floods in parts of Australia; in India and Bangladesh leaving millions homeless; storms and fatal landslides in Brazil; tropical storms in the northern Philippines this month. America witnessed a "once-in-200-years" meteorological event of the Texas floods amid drought; and just in the past few days, the enormity of climate disaster in Sudan and Pakistan is becoming all too clear, where floods have completely upended people's lives and indeed, taken away many.

Dealing with flooding in six states, Sudan has had to declare a state of emergency. According to the UN, the floods have affected 136,000 people, killing 89 people and injuring 40. Drone footage shows villages partially submerged in water. Like many other parts of the world, last year too, Sudan saw similar tragic scenes. Given the regularity of such weather events, be it wild fires or storms, it would seem prudent that individual countries boost their climate preparedness. Stronger infrastructure built to cope with extraordinary weather events can be a critical to save lives and curtail damage.

For the moment, however, responding with the required urgency, the UAE has despatched aid to both the stricken nations that need supplies. President Sheikh Mohamed ordered humanitarian aid worth Dh25 million to be delivered to Sudan and 30 tonnes and 10,000 tents have already been sent, which will be followed by more as a humanitarian air bridge has been declared by the UAE. And like with Sudan, Sheikh Mohamed has ordered 3,000 tonnes of food supplies and other humanitarian aid to be delivered to Pakistan.

The trauma such devastation causes has no easy fix. Indeed, where lives are lost, families are left asunder and often permanently scarred. But despite the magnitude of trauma, rescue operations are greatly benefitted when wealthier nations step up to help nations in need. It is the only appropriate moral response. It was a widely-applauded point made last year at the UN General Assembly by the Barbados Prime Minister Mia Amor Mottley, who in her speech advocated strongly for assistance to developing countries vulnerable to climate change.

In any affected part of the world, aid parcels of food and medical supplies are a lifeline to people whose homes have been washed away and who, in many cases, are effectively without shelter until the airplanes of aid arrive with the crucial cargo of tents.

The gravity of the situation in Pakistan's Sindh province is encapsulated in its rising death toll, which has reached 1,033, due to the breached water levels of the Indus River, Pakistan's longest and most important river. In just the past 24 hours, 119 people in Pakistan have lost their lives and 33 million people – almost 15 per cent of they country's population – have been affected.

As unavoidable as natural calamities are, the images of people struggling to cope with the aftermath of such events should lead countries to not only meet their climate targets – as is likely to be reiterated at the climate summit Cop27 in Egypt in November – but also to allocate more resources to bolster disaster management strategies. This would help countries, no matter in which hemisphere, to be better positioned to effectively respond to inevitable climate disasters. Floods and fires cannot in themselves be prevented. But in a planet growing warmer, the cost of countries being inadequately prepared could, in the years to come, be too high a price to pay.

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: August 29, 2022, 2:00 AM