UAE allocates $200m to support growth for low-income countries

The UAE has announced it will allocate $200 million in funding to support growth for low-income countries.

The funding will go towards the Poverty Reduction and Growth Trust, which addresses the challenges facing low-income countries that face high inflation, food insecurity, increasing risk of debt and high borrowing costs.

The aim is to reduce poverty levels across the globe, as part of the UAE's commitment to support the UN's Sustainable Development Goal of enduring a better and more sustainable future.

The announcement was made during the World Bank and International Monetary Fund's (IMF) 2023 Annual Meetings in Marrakesh, Morocco, on Saturday.

"Under the leadership of His Highness Sheikh Mohamed bin Zayed, President of the UAE, and under the guidance of His Highness Sheikh Mohammed bin Rashid, Vice President, Prime Minister and Ruler of Dubai, the UAE is committed to realising the UN SDGs by all means possible," said Mohamed Al Hussaini, Minister of State for Financial Affairs, in a statement.

"This includes contributing to trust funds, which falls within the UAE's strategy and vision for co-operation and co-ordination with regional and international development organisations and institutions.

"This bolsters development projects and enhances the benefits gained from provided projects, services and funding mechanisms, while reaffirming the UAE's commitment to backing international humanitarian initiatives."

Mr Al Hussaini added that holding the WBG-IMF Annual Meetings in Africa, for the first time in nearly five decades, was a historic opportunity to address issues related to development, with more than 189 countries in attendance.

"The history of UAE's foreign aid began with its foundation," he said. "It is now a vital financial, commercial and logistical hub for the Middle East, Africa and South Asia, thus linking its economy to those nations' economies."

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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