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Ministerial Decision No. 173 of 2025: Depreciation Adjustments for Investment Properties Held at Fair Value
04/08/2025
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.
Read the full article to get a more detailed understanding of this decision.
Key Highlights
- Who can benefit?
- Election to Claim Depreciation
- Scope
- 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.
- Taxable persons preparing accrual-based financial statements and electing to recognise gains and losses on a realisation basis under the UAE Corporate Tax Law.
- Eligible taxpayers can make an irrevocable election to apply a depreciation allowance for tax purposes. Missing the election deadline means losing the right permanently.
- Applies to all qualifying Investment Properties measured at fair value from 1 January 2025 onwards. Includes specific provisions for asset transfers within groups, realisation events, and anti-abuse rules.
Andersen Takeaway
This change creates a valuable tax planning opportunity for real estate, retail, hospitality, and other asset-heavy sectors. However, given its irrevocable nature and the complexity of transfer rules, a careful assessment is essential before making the election.Read the full article to get a more detailed understanding of this decision.