South Korean vessels near the maritime boundary with the North. Seoul said its navy fired warning shots at a North Korean merchant ship that crossed the boundary. AP
South Korean vessels near the maritime boundary with the North. Seoul said its navy fired warning shots at a North Korean merchant ship that crossed the boundary. AP
South Korean vessels near the maritime boundary with the North. Seoul said its navy fired warning shots at a North Korean merchant ship that crossed the boundary. AP
South Korean vessels near the maritime boundary with the North. Seoul said its navy fired warning shots at a North Korean merchant ship that crossed the boundary. AP

North and South Korea exchange fire along maritime boundary


Robert Tollast
  • English
  • Arabic

North and South Korean naval ships exchanged rocket and gunfire on Sunday, after Pyongyang accused a South Korean vessel of straying into its territorial waters.

The border between the two countries has long been considered to be one of the most dangerous flashpoints in the world.

Hundreds of thousands of troops and tens of thousands of artillery pieces have been locked in a decades-long standoff, separated by only four kilometres of neutral ground, known as the demilitarised zone.

  • A surface-to-surface missile is fired off the east coast of South Korea. Reuters
    A surface-to-surface missile is fired off the east coast of South Korea. Reuters
  • The South Korean and US militaries fired a volley of missiles into the sea in response to North Korea firing a ballistic missile over Japan. AFP
    The South Korean and US militaries fired a volley of missiles into the sea in response to North Korea firing a ballistic missile over Japan. AFP
  • A South Korean F-15K fighter drops two bombs over an island target in response to North Korea's missile launch earlier in the day. Getty
    A South Korean F-15K fighter drops two bombs over an island target in response to North Korea's missile launch earlier in the day. Getty
  • South Korean and US jets fly over the Korean Peninsula after North Korea's ballistic missile launch. Getty
    South Korean and US jets fly over the Korean Peninsula after North Korea's ballistic missile launch. Getty
  • A screen shows images of North Korea's leader Kim Jong-un during a news update in Tokyo. North Korea fired a missile over Japan for the first time in five years on October 4. AFP
    A screen shows images of North Korea's leader Kim Jong-un during a news update in Tokyo. North Korea fired a missile over Japan for the first time in five years on October 4. AFP
  • A screen in Tokyo displays the trajectory of North Korea's ballistic missile on a map. EPA
    A screen in Tokyo displays the trajectory of North Korea's ballistic missile on a map. EPA
  • North Korea’s launch of the nuclear-capable ballistic missile was its fifth round of weapons tests in 10 days. EPA
    North Korea’s launch of the nuclear-capable ballistic missile was its fifth round of weapons tests in 10 days. EPA
  • Col Kim Jun-rak, head of public relations in South Korea's Joint Chiefs of Staff office, gives a briefing in Seoul. EPA
    Col Kim Jun-rak, head of public relations in South Korea's Joint Chiefs of Staff office, gives a briefing in Seoul. EPA

South Korea’s military said warning shots had been fired at a North Korean merchant ship that crossed the Northern Limit Line (NLL), a maritime boundary between the rival states.

North Korea said rocket artillery had been used to deter the South Korean vessel, without specifying whether it was the same ship that fired warning shots.

“We ordered initial countermeasures to strongly expel the enemy warship,” a representative for the General Staff of the North's Korean People's Army said, according to the official KCNA news agency.

Analysts say a conflict on the peninsula, which has experienced a shaky ceasefire since the end of the 1953 Korean War, would be one of the most violent wars in recent memory, dwarfing even the Ukraine crisis in terms of casualties.

In 2017, a US Department of Defence simulation estimated that 20,000 people would die every day if a new conflict erupted.

South Korea’s Joint Chiefs of Staff issued a statement after Sunday’s exchange of fire, urging the North Koreans “to immediately cease consistent provocations and accusations which harm the peace and stability of the Korean peninsula, as well as the international community”.

Exchanges of fire between the two sides are rare, with the last serious clash occurring in May 2020 when troops fired at each other over the demilitarised zone.

The latest tension comes after the announcement of a joint US-South Korean naval exercise in the South’s territorial waters, which Pyongyang condemned as a provocation and a “threatening” act.

North Korea frequently conducts ballistic missile tests near South Korea and Japan, drawing international condemnation, and recently conducted what analysts said was a simulated nuclear attack on 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. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: October 24, 2022, 6:49 AM