TL; Dr:
- Finance ministry
Ministerial decision number 173/2025 If they are effective from the tax period starting from January 1, 2025, then the firms allowed to cut depreciation on investment properties measured at a reasonable price. - Companies may claim depreciation up to 4% of the original cost or the written-down value of the account for each 12 the month period.
- Tax experts, including Aldar, highlight the justified treatment in assets, more and more planning flexibility and fair-value and historical-assets.
- The “base of the feeling” is irreversible and introduces fresh tax plan equipment, although firms must navigate the “Paw -Back” provisions.
Businesses in UAE are adjusting new tax guidelines that affect how they report the value of their property. The Finance Ministry has introduced specific provisions under the Corporate Tax Framework that controls how companies can reduce the property of the property to be recorded at a reasonable price, a method that reflects the value of the existing market rather than historic procurement prices. This change is particularly important for companies that follow the International Financial Reporting Standards (IFRs), as the UAE has many real estate developers, investment firms and asset industries. Under the new rule, even when the value of a property increases on the balance sheet due to the appreciation of the market, the depreciation expenditure claimed for tax objectives will still be based on the original cost of the property, not at the high market price.Experts believe that it provides clarity and prevents businesses from increasing depreciation cuts to reduce tax liabilities. According to UAE tax professionals, a local news outlet in Al Etihad, this step is a strategic explanation that aims to align tax practices with international standards, while protecting the UAE’s new corporate tax system from flaws.
What does the new rule say
- Who affects it: Businesses with investment properties using businesses
Fair price accounting Under IFRS. - Eligibility status: The option of the base of the feeling should choose, the meaning profit is made at disposal, not the annual book adjustment.
- Depreciation cap: Up to 4% of the original cost or written-down value, prests for partial-year holdings.
- Election details: Once, the irreversible option must be first done in the 2025 tax period. Once selected, it is equally applied to all relevant properties.
- Claws: The decision involves guidance on the reverse trigger, especially transfer or re -evaluation, so companies should carefully track annual changes.
- Purpose: Even though the corporate tax implementation date coverage begins on 1 January 2025, even if the fair price assets have been held before or after June 1, 2023.
Reference: Why does it matter
Previously, firms using reasonable value accounting did not get any depreciation benefits unlike those using historical costs, which could cut the annual depreciation expenses. As the National has described it, it was “an important change from pre -practice”, which brings equality and compliance clarity. Gulf News states that the rules aims to make tax fairness between firms using fair price and historical cost methods “, a step welcomed widely by developers and financial leaders.
Voices from the market
In the interview of Al Etihad, experts emphasized the importance of ministerial decision 173/2025:
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Elder Properties Talking to Al Etihad, appreciated the decision to “tax neutrality and equity” and called it “progressive and well calibrated steps”. Elder’s Finance Major Note Note This gives confidence to the deployment of capital in its DH25.8 billion assets under management. - Aurifer The founding partner, as stated in the National, reported that the rules allow the firms to claim depreciation, intend taxable profits and choose the basis of receipt to align tax treatment with economic reality.
Practical implications for businesses
- Strategic tax scheme
The firms can now choose that to hold assets at the market or historical value, factoring in the current outlay, potential long -term benefits and time. - Cash flow profit
Depreciation cuts can improve cash flow by reducing taxable income and corporate tax liabilities, especially during the early years of holding and by reducing corporate tax liabilities. - Clarity and compliance confidence
With guidelines on claw-back events, firms can manage infection, inter-company transfer, and development scenarios more accurately. - Investor appeal
Developers such as Elders believe that reforms support the investor trust and better capital allocation in the real estate sector.
Major ideas and risk
- Inaccessible election: Once selected, a comprehensive internal assessment is required before the companies withdraw.
- Annual calculation: Depreciation should be tracked and properly documented, balanced the benefits and balanced-down values.
- Claw vigilance: The events of revaluation must occur, firms require strong systems to follow the rules.
- Compliance time: Businesses should choose the first 2025 tax period, often align with the calendar year, so the deadline should be preferred.
Extensive tax landscape
The decision is part of a wide pattern of refining the UAE’s Corporate Tax Act (decree-lal 47/2022), introducing the 9% base rate starting from June 1, 2023, which was for profits of more than AED 375,000. According to WAM, in 2025, corporate tax registration passed 576,000 institutions, which indicate widely. Additional 2025 reforms include excise duty and clarity on energy and digital taxation on sugars, which align the United Arab Emirates with global fiscal standards. The 2025 depreciation rule for fair-valued investment assets is a milestone in the development of UAE Corporate Taxation. By restoring equity between reporting methods and depreciation allowances, the Ministry has introduced the real planning lever for firms, especially in real estate. As the local news outlet confirm various interviews, this step is more than the administrative: it confirms the reputation of the UAE for fiscal clarity, fairness and investor -friendly rules.
