The UAE Ministry of Finance has issued Ministerial Decision No. 173 of 2025, introducing a mechanism for taxpayers to claim notional tax depreciation on Investment Properties measured at fair value, even though no accounting depreciation is recorded in the books.
Key Highlights
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- Who can benefit?
- Taxable persons preparing accrual-based financial statements and electing to recognise gains and losses on a realisation basis under the UAE Corporate Tax Law.
- Election to Claim Depreciation
- Eligible taxpayers can make an irrevocable election to apply a depreciation allowance for tax purposes. Missing the election deadline means losing the right permanently.
- Scope
- Applies to all qualifying Investment Properties measured at fair value from
- Who can benefit?
1 January 2025
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- onwards. Includes specific provisions for asset transfers within groups, realisation events, and anti-abuse rules.
- Practical Implications
- Potential tax deduction despite no book depreciation.
- Requires robust cost tracking and documentation.
- May impact deferred tax accounting and effective tax rate under OECD Pillar Two rules.
- Special care needed for intra-group transfers to avoid challenges under anti-abuse provisions.
