UAE MOF: Depreciation on Investment Properties held at Fair Value
UAE Ministry of Finance: Ministerial Decision on Depreciation Adjustments for Investment Properties Held at Fair Value
A welcome clarification for Taxpayers holding Investment Properties (‘IP’) at fair value under IFRS. Businesses opting for the realization basis must now carefully compute depreciation deductions in line with the new rules.
Earlier, Taxpayers were not allowed to deduct depreciation on Investment Properties (‘IP’) if realisation basis is chosen. However, with the issuance of this new Ministerial Decision, Taxpayers who elect the realization basis can now deduct depreciation on such IP from their taxable income. The deduction will be lower of the tax written down value of:
- The investment property or 4% of original cost of IP, for each 12-month tax period,
OR - A prorated amount if the tax period is shorter/ longer than 12 months, or if the property was held only for part of the tax period.
Note: Taxpayers must maintain separate working with respect to depreciation for Corporate Tax purposes.
Clarity on Tax Teatment Starts with the Right Advice
Ensure your depreciation strategy aligns with the latest MOF decision
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