A protestor draped in an Israeli flag takes part in a demonstration against a judicial reform bill outside the Knesset, Israel's parliament, in Jerusalem on Monday. The bill will reduce judges' ability to overrule government decisions and appointments. Bloomberg
A protestor draped in an Israeli flag takes part in a demonstration against a judicial reform bill outside the Knesset, Israel's parliament, in Jerusalem on Monday. The bill will reduce judges' ability to overrule government decisions and appointments. Bloomberg
A protestor draped in an Israeli flag takes part in a demonstration against a judicial reform bill outside the Knesset, Israel's parliament, in Jerusalem on Monday. The bill will reduce judges' ability to overrule government decisions and appointments. Bloomberg
A protestor draped in an Israeli flag takes part in a demonstration against a judicial reform bill outside the Knesset, Israel's parliament, in Jerusalem on Monday. The bill will reduce judges' abilit


Israel's battle over overhauling its judiciary is shaking the country's foundations


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July 28, 2023

Like the ripples spreading from a pebble tossed into a pool, Israel’s Knesset vote, 64-0, to “rebalance” powers of judiciary and legislature has added fresh turbulence to the already choppy waters of this troubled country’s international relations.

For now, the waves of domestic protest in the build-up to the vote, now even more stormy since its passing, obscure the outfall with allies. In the long run, however, they may yet come to dwarf the impact of this historic decision on the country.

From its creation 75 years ago, Israel has endured rocky and at times violent relations in a region where some of its neighbours still challenge its very existence. That strength to resist and prosper has its roots in both its unity and its powerful allies.

Now those staples of stability are being put to the test.

Israeli Prime Minister Benjamin Netanyahu has been on rocky ground with the White House since he got back in to office last year. AP
Israeli Prime Minister Benjamin Netanyahu has been on rocky ground with the White House since he got back in to office last year. AP

Israel’s strongest friend, the US, has been urging Prime Minister Benjamin Netanyahu and his extreme right-wing religious coalition government to exercise caution, warning the vote, and others that are expected to follow, could undermine Israel’s powerful democracy by reducing the influence of the judiciary.

Mr Netanyahu and his government argue the reverse is true, and that as elected officials, unlike the judiciary, they represent the will of the people and therefore actually embody core democratic values.

The result however, if all the planned changes go through, will give Israel’s most hardline, right-wing government in its history the power to run roughshod over existing judicial checks and balances at a time when the government’s relations with Palestinians are at their lowest ebb in recent memory, and tensions over aggressive Israeli security operations and proposed settlements on occupied territory are at their highest in a generation.

The US State Department’s reaction was swift, echoing views from the White House: “It was unfortunate that the vote today took place with the slimmest possible majority,” adding “we believe changes of this magnitude ought to be made with really the broadest consensus possible and that did not happen here.”

The reality is, Mr Netanyahu, who had a pacemaker inserted in his chest 48 hours before the vote, has been on rocky ground with the White House since he got back into office late December last year and cobbled together his extreme-right coalition.

Last week it was Israel’s President, Isaac Herzog, not Mr Netanyahu, who got an invite to the White House to meet President Joe Biden. The intention was to ease some of the growing tensions and potentially persuade this vital ally on the potential consequences of ignoring US concerns.

Mr Biden did get to show his pro-Israel credentials. But Mr Herzog, whose role is mostly ceremonial, doesn’t have the powers Mr Netanyahu does and if he was given a message of caution he wasn’t, it appears, able to make it stick when he got home.

If Israel’s allies are unclear about how to handle the situation, Israel’s enemies are applauding the tumult

On the eve of Mr Herzog’s visit, Mr Biden did extend a slightly ambiguous invite to Mr Netanyahu for later in the year. Whatever form it takes, it is unlikely to be smooth sailing when it does happen. Mr Biden has described this Netanyahu government as “one of the most extremist” in 50 years.

Mr Netanyahu and his conservative religious and settler coalition appears to be straining the democratic values Mr Biden came into office championing, and that until recently Israel seemed to share.

Aaron David Miller, a seasoned US diplomat who has served several different Democrat and Republican administrations, says Mr Biden is in a bind: “What you have here is a president who is waking up to the fact that that he's no longer dealing with the old Benjamin Netanyahu, the risk averse, cautious [one] who takes one step forward and two steps back. He's dealing now with a desperate Benjamin Netanyahu, risk-ready, determined for any number of reasons to keep this government, this extreme right-wing government.”

The personal stakes for Mr Netanyahu are huge. Out of office he faces a number of legal challenges that, although he dismisses, could land him in jail if proven. Current polling in Israel predicts if elections were held today Mr Netanyahu could not form a government.

Mr Miller predicts Mr Biden’s current pressure is unlikely to bend the trajectory of Mr Netanyahu’s collision: “He must maintain this coalition filled with radical fundamentalist extremist ministers, even at the risk of undermining destroying Israeli institutions, undermining the cohesion of the country and injecting a fair amount of tension into us Israeli relations.”

Others among Israel’s staunch allies, like the UK, have also responded by urging the Israeli government to “build consensus and avoid division”, and to preserve the independence of its judiciary.

The US, like the UK, has been struggling to work out how best to handle Mr Netanyahu.

In March, the UK and Israel signed a “landmark agreement deepening tech, trade and security ties”, saying the countries were “committed to a modern, innovative, forward-looking relationship”. Yet four months later in July, the UK, alongside Australia and Canada, was publicly criticising Mr Netanyahu’s policies, saying Israel’s expansion in the West Bank was an “obstacle to peace”.

It is hard to see how the waves this Netanyahu government has set in motion can ultimately push his goal of expanding the Abraham Accords signed three years ago with the UAE, Bahrain and Morocco safely ashore, let alone Mr Netanyahu’s aspiration of what he calls “expanding the circle of peace” to include Saudi Arabia.

His government has already faced criticism from the UAE for its handling of tensions with Palestinians, an area in which several of his hardline ministers goad Mr Netanyahu to get even tougher.

For now, Israel’s allies are likely to look on with increasing alarm. According to Mr Miller, the potential domestic political cost of an ugly spat with Israel’s Prime Minister just as Mr Biden is about to enter an election cycle is a risk he is unlikely to take: “He has no desire and seems to me to impose any costs or consequences, not just on the issue of Israeli internal politics, but on what the Israeli government is doing in the West Bank, which is pursuing a set of annexation in policies in everything but name so yeah, I think it's going to be very difficult for Mr Biden to continue to walk that line. But I believe he will.”

If Israel’s allies are unclear about how to handle the situation, Israel’s enemies are applauding the tumult. Neighbouring Lebanon’s Iran-backed Hezbollah claimed, not for the first time, that Israel is self-destructing, and on a “path of collapse and fragmentation”.

Unlike a single pebble in thrown in a pond, the ripples Mr Netanyahu’s government is creating are accumulative: pebble, followed by stone, followed by rock. They are not going to ebb quickly to insignificance.

At worst, they could erode Israel’s democratic foundations and drown out the supportive voices of even its staunchest allies.

At a minimum, they will bring additional and unwanted turbulence to the increasingly fragile world order where China exploits America’s diplomatic missteps and Russia brazenly invades its neighbour, throwing out its own destabilising tsunami of harsh economic peril.

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Engine: 2.0-litre 4-cyl turbo

Power: 201hp at 5,200rpm

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Transmission: 6-speed auto

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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

Expo details

Expo 2020 Dubai will be the first World Expo to be held in the Middle East, Africa and South Asia

The world fair will run for six months from October 20, 2020 to April 10, 2021.

It is expected to attract 25 million visits

Some 70 per cent visitors are projected to come from outside the UAE, the largest proportion of international visitors in the 167-year history of World Expos.

More than 30,000 volunteers are required for Expo 2020

The site covers a total of 4.38 sqkm, including a 2 sqkm gated area

It is located adjacent to Al Maktoum International Airport in Dubai South

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Mina Cup winners

Under 12 – Minerva Academy

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Updated: July 28, 2023, 7:30 AM