Iceland faces “a daunting period of upheaval" after homes were destroyed by lava emitted from a long-dormant volcanic system, President Gudni Johannesson said.
Molten lava flows reached the outskirts of Grindavik around noon on Sunday, setting three houses alight, although the town had been evacuated earlier and there was no immediate danger to people.
The volcano, which erupted in south-western Iceland for the second time in less than a month, appeared to be less active early on Monday.
Authorities built barriers of earth and rock in recent weeks to try to prevent lava from reaching the fishing town 40km south-west of the capital Reykjavik.
Mr Johannesson said in a televised address on Sunday night “a daunting period of upheaval has begun on the Reykjanes peninsula” and authorities were battling "tremendous forces of nature".
"We don’t yet know how this eruption will unfold but we must still take those actions that are within our power,” the President said.
“We continue to hope for as good an outcome as possible in the face of these tremendous forces of nature. We will carry on with our responsibilities and we will continue to stand together.”
Volcanic hotspot
It was the second volcanic eruption on the Reykjanes peninsula in south-western Iceland in less than one month and the fifth since 2021.
An eruption started in the Svartsengi volcanic system on December 18 after the complete evacuation of Grindavik's 4,000 residents and the closure of the Blue Lagoon geothermal spa, a popular tourist spot.
No one is known to have been killed in the eruptions but a workman is missing after reportedly falling into a crack opened by the volcano.
More than 100 Grindavik residents have returned in recent weeks before Saturday's renewed evacuation order, local authorities said.
Lying between the Eurasian and North American tectonic plates, two of the largest on the planet, Iceland is a seismic and volcanic hotspot. The two plates are moving in opposite directions.
In 2010, ash clouds from eruptions of the Eyafjallajokull volcano in the south of Iceland spread over large parts of Europe, leading to about 100,000 flights being grounded and forcing hundreds of Icelanders from their homes.
Unlike Eyafjallajokull, the Reykjanes systems are not trapped under glaciers, so are not expected to cause similar ash clouds.
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Manchester United v Manchester City, Wednesday, 11pm (UAE)
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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
UAE currency: the story behind the money in your pockets
Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.