Britain announced on Wednesday that it would open a path to citizenship for hundreds of thousands of people in Hong Kong who hold a UK-issued passport after China adopted a new national security law.
Boris Johnson, the UK prime minister, told parliament that the new security law was a clear breach of China’s obligations under the Sino-British 1984 Joint Declaration. He called on Beijing to honour its international obligations even as the first arrests under the new law by police were reported.
Holders of the British National Overseas passport, a legacy status from British rule in the territory that ended in 1997, will for the first time have the right to settle in the UK for five years. About 2.9 million people who were born in Hong Kong when it was still a British colony are eligible for a BNO passport.
“We will honour our commitments to the BNOs,” Dominic Raab, the British foreign secretary, said.
“China, through this national security legislation, is not living up to its promises to the people of Hong Kong,” Mr Raab said. “We will live up to our promises.
“We have very carefully now assessed the contents of this national security legislation since it was published last night,” Mr Raab said.
“It constitutes a clear violation of the autonomy of Hong Kong and a direct threat to the freedoms of its people, and therefore I’m afraid to say it is a clear and serious violation of the Joint Declaration treaty between the United Kingdom and China.”
Mr Raab said he would set out shortly the action Britain would take with its international partners to make provision for the resettlement of large number if that was the outcome of London’s offer. The US has said it will roll back trade and other provisions that recognised Hong Kong’s autonomy from Beijing.
Hong Kong’s autonomy was guaranteed under the “one country, two systems” agreement enshrined in the Sino-British Joint Declaration signed by the Chinese premier Zhao Ziyang and the British prime minister Margaret Thatcher.
Hong Kong was handed back to China in 1997 after more than 150 years of British rule.
Carrie Lam, the Hong Kong chief executive who runs the government under the set-up, issued a plea for international understanding of the sweeping new national security legislation. She said it was the “most important development” in relations between Hong Kong and China since the territory’s handover.
The law came into force shortly before the July 1 anniversary of Hong Kong’s return to China from Britain, a symbolic occasion usually marked by mass protests against Beijing. An appeals panel upheld an unprecedented police ban against a Civil Human Rights Front rally planned for Wednesday, although some activists said they would march anyway. Arrests ensued.
The legislation, which was published in full only as it took effect, sets out sentences as long as life in prison for the most serious cases of terrorism, secession, subversion of state power and collusion with foreign forces.
Which products are to be taxed?
To be taxed:
Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
Not taxed
Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.
Products excluded from the ‘sweetened drink’ category would contain at least 75 per cent milk in a ready-to-drink form or as a milk substitute, baby formula, follow-up formula or baby food, beverages consumed for medicinal use and special dietary needs determined as per GCC Standardisation Organisation rules
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What sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
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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
Results:
Men’s wheelchair 200m T34: 1. Walid Ktila (TUN) 27.14; 2. Mohammed Al Hammadi (UAE) 27.81; 3. Rheed McCracken (AUS) 27.81.
