The Decision allows depreciation deductions for fair-valued investment properties under new corporate tax rules from 2025.
The UAE Ministry of Finance has issued Ministerial Decision No. 173 of 2025, effective for tax periods beginning 1 January 2025, allowing taxable persons to claim annual depreciation deductions on investment properties held at fair value for Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
Under the decision, taxpayers who elect the realisation basis under Article 20(3) of the Corporate Tax Law may deduct depreciation equal to the lower of:
- 4% of the original cost of the investment property for each 12-month tax period (prorated where applicable), or
- The tax written down value at the start of the relevant tax period.
The election must be made in the tax return for the first tax period in which the investment property is held and is irrevocable, applying to all qualifying investment properties held at fair value.
The decision further outlines that realisation events will trigger income adjustments, and anti-abuse rules will apply to related-party transfers of investment property.
This depreciation adjustment mechanism provides clarity on how fair-valued investment properties may be treated for corporate tax purposes in the UAE under the new tax regime.
