July 21, 2025 | Dubai, UAE: In a move that comes as a welcome relief for many businesses, the UAE has announced that companies can now deduct UAE corporate tax depreciation on investment properties that are valued at fair market rates.
It might sound technical, but for business owners and finance teams across the country, this decision is a big deal. It means that firms, whether they’ve owned properties for years or are just entering the investment space now, have a fairer, clearer way to manage their tax bills.
Understanding taxes isn’t always easy , especially for businesses trying to navigate new rules while keeping their finances in check. That’s why the recent update around UAE corporate tax depreciation is catching the attention of companies across the country. For firms that hold investment properties, this change could mean real savings and clearer planning. The ability to claim UAE corporate tax depreciation on fair-valued assets marks an important shift toward a more balanced and transparent tax environment.
And more than just being a tax update, it’s a step towards trust, transparency, and smarter growth, especially for businesses that have been navigating new corporate tax rules introduced just last year.
What’s Changed and Why It Matters
Until now, only companies that kept their investment properties recorded at their original cost (called “historical cost”) could deduct UAE corporate tax depreciation in their tax returns. But those who regularly updated their property values to reflect the market (known as the “fair value basis”) were left out.
This latest move fixes that gap. Now, businesses using the fair value method can claim UAE corporate tax depreciation, bringing more fairness to the table.
Here’s how it works:
- You can deduct either the tax written-down value of your investment property or
- Up to 4% of the original cost every 12 months, whichever is lower
This isn’t just a win for accounting departments. It gives businesses the chance to reflect their actual costs more accurately and plan more confidently, especially in long-term real estate investments.
One Simple Choice That Opens Big Doors
To take advantage of the new UAE corporate tax depreciation option, companies must make a one-time, irreversible decision called an “election” in their first tax year starting on or after January 1, 2025. Once you opt in, the benefit applies to all your fair-valued investment properties moving forward. This streamlines things for the future and removes the uncertainty many companies previously faced.
And if you missed the earlier deadline to choose the “realization basis,” a condition required to claim this benefit, the UAE has thoughtfully offered an exceptional window to catch up and opt in now. In simpler terms? Even if you were unsure about your tax strategy last year, the door hasn’t closed. You still have a chance to make the right move for your business.
More Than Numbers: A Message of Trust
It’s easy to see tax updates as paperwork. But this decision is something more. By allowing UAE corporate tax depreciation for fair-valued properties, the government is sending a message: “We see how you run your business, and we’re adapting to support it.” Many companies revalue their properties regularly to reflect the real market. It’s a common, globally accepted practice. Now, those companies are no longer penalized for it.
And with added clarity on how this applies in cases like property transfers between related parties, third parties, or even self-developed assets, firms can avoid confusion and move forward with confidence. For CFOs, finance heads, and founders, this update means fewer grey areas, fewer surprises, and a more stable path forward in a fast-changing business world.
The Bigger Picture: A Fairer System for All
At a time when businesses are asking for clarity, fairness, and smarter governance, the UAE is once again listening. Allowing UAE corporate tax depreciation is not just about cutting costs; it’s about aligning with how modern businesses actually operate. It’s about building a tax system that reflects real-world needs, not outdated models.
And for industries like real estate, hospitality, construction, and investment, where property is a key part of operations, this decision unlocks real value. It means more accurate reporting, smarter planning, and, ultimately, better business outcomes.
Making Tax Work for You, Not Against You
This update may seem like a technical change on paper, but for the people running businesses, the accountants, the CEOs, and the startup founders, it’s a huge step in the right direction. The introduction of UAE corporate tax depreciation for fair-valued investment properties levels the playing field, simplifies planning, and makes tax feel a little less like a burden and a little more like a tool. In a country built on innovation, ambition, and global investment, this is the kind of regulation that helps businesses not just survive but truly thrive.
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