Subtitle: Ministry of Finance announces new decision on July 17, offering clarity and relief to corporate property holders
Published on: July 18, 2025
Source: Based on the official report from Khaleej Times
In a significant move that brings relief and clarity to businesses, the UAE Ministry of Finance has announced that companies can now deduct tax depreciation on fair-valued investment properties, starting with their first tax period on or after January 1, 2025.
This new decision—announced on July 17—forms part of the broader implementation of Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses. It specifically applies to taxpayers who elect the realisation basis, allowing them to deduct depreciation from their taxable income for investment properties held on a fair value basis.
Key Highlights of the Announcement
- Eligibility: Businesses opting for the realisation basis of taxation and owning investment properties evaluated at fair market value.
- Tax Depreciation Limit: The allowable depreciation deduction will be the lower of:
- The tax written down value of the investment property
- Or 4% of the original cost of the investment property per 12-month tax period (or prorated for shorter periods).
- Applicability: Applies to investment properties held both before and after the introduction of UAE corporate tax.
- Equal Treatment: Brings parity between those using historical cost basis (who already claim accounting depreciation) and those using fair value basis.
- One-Time Election: Taxpayers must make an irrevocable election in their first eligible tax period starting on or after January 1, 2025. This applies to all investment properties going forward.
- Exceptional Window: Taxpayers who wish to adopt the realisation basis but missed the initial deadline will be offered a special window to opt in and benefit from the new depreciation rules.
- Clarity on Clawback: The decision also outlines circumstances (other than disposal) where a claw-back of tax depreciation might apply, helping businesses remain compliant and informed.
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Why This Matters for UAE Businesses
This landmark decision provides much-needed clarity and fairness in how companies manage taxation related to investment property. It ensures that businesses holding properties at fair market value are not at a disadvantage compared to those recording properties at historical cost.
Moreover, by allowing depreciation deductions, it helps companies reduce taxable income and better reflect the economic wear and tear of their assets.
Final Thoughts
The move is part of the UAE’s ongoing efforts to create a transparent, business-friendly tax system. Businesses should consult their financial advisors to assess eligibility and take timely action to benefit from this provision.
To stay updated on corporate tax developments, visit Ministry of Finance UAE or refer to the original report on Khaleej Times.
Disclaimer: This article is for informational purposes only and should not be considered legal or tax advice. Always consult a licensed tax professional for your company’s specific obligations.
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