logo
How UAE's decision on property depreciation charge lowers tax burden

How UAE's decision on property depreciation charge lowers tax burden

The National18-07-2025
The UAE Ministry of Finance's decision to help businesses make depreciation tax adjustments for investment properties will provide a 'short-term tax and cash benefit', experts have said.
The ministry issued Decision No 173 of 2025 on Thursday, allowing certain businesses to deduct depreciation from their taxable income on investment properties accounted for at fair value – but only if they elect the realisation basis for capital gains and losses. It is applicable for tax periods starting January 1, 2025.
The deduction will be limited to the lower of the tax written down value of the investment property, or 4 per cent of its original cost for each 12-month tax period, or a pro-rated amount if the tax period is shorter or longer than 12 months, or if the property was held only for part of the tax year, the ministry said.
Fair value is the estimated price an asset would sell for on the open market, while realisable value is the estimated amount that can be obtained from an asset after deducting any costs necessary to make the sale or completion. Written down value is the net value after deduction of depreciation, said Anurag Chaturvedi, chief executive of financial advisory Andersen UAE.
He said this was 'a welcome clarification' for taxpayers holding investment property at fair value under the International Financial Reporting Standards. Businesses opting for the realisation basis must 'carefully compute' depreciation deductions in line with the new rules, he added.
'In simple terms, many companies own investment properties that increase or decrease in value over time. These values are updated in their books [fair value accounting] but, until now, they could not deduct any depreciation for tax purposes – meaning higher taxable profits and more tax to pay,' said Thomas Vanhee, founding partner of boutique tax advisory services firm Aurifer.
'With this new decision, companies that choose the realisation basis [ie, they only pay tax when a property is sold, not every year based on value changes] can now deduct a portion of the property's cost [up to 4 per cent annually] from their taxable income.'
It provides a short-term tax and cash benefit for businesses through the depreciation granted, something which did not exist under the regime applicable up to the end of 2024. It also better aligns with the property's economic life, Mr Vanhee said.
The decision impacts businesses, not people, and further strengthens the UAE's tax framework, he said. This is 'a significant change from prior practice', where depreciation was not permitted on such properties if fair value accounting was used, he added.
For example, if a UAE company owns an investment property that originally cost Dh10 million ($2.7 million), recorded at fair value under the IFRS, and it chooses the realisation basis for tax purposes, the allowable depreciation would be 4 per cent of the original cost, or Dh400,000, Mr Chaturvedi said.
The UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent starting from the financial year beginning on or after June 1, 2023. It took the income of companies exceeding Dh375,000 within the taxable bracket.
Business owners in the country would be subject to corporate tax only if their turnover in a calendar year exceeds Dh1 million, the ministry said at the time.
Abu Dhabi's biggest listed developer, Aldar Properties, welcomed the 'progressive and well-calibrated' decision and said it ensured 'tax neutrality and equity', with deductions available to businesses that hold investment properties on a historical cost basis.
The decision also provides clarity on how tax depreciation applies in cases of property transfers (between related or third parties), developments and claw-back scenarios – ensuring businesses have a clear view of their compliance obligations and financial planning, the developer said in a statement on Friday.
Aldar operates two business divisions: Aldar Development and Aldar Investment. The latter's portfolio of income-generating properties had a gross asset value of Dh25.8 billion as of December 31, 2024.
Faisal Falaknaz, group chief financial and sustainability officer of Aldar, said the decision 'creates parity' between different accounting treatments and helps companies plan long-term capital deployment 'more effectively'.
Gaurav Keswani, founder and managing director of Dubai-based financial consulting firm JSB, said it's not a decision to be taken lightly.
"Once a business opts in, it's irreversible and if the property is later transferred, there's the potential for a claw-back of the tax benefit. So, careful planning is essential," he warned.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

UAE's Advertiser Permit to boost content creators' credibility, drive sector growth
UAE's Advertiser Permit to boost content creators' credibility, drive sector growth

Al Etihad

time2 hours ago

  • Al Etihad

UAE's Advertiser Permit to boost content creators' credibility, drive sector growth

1 Aug 2025 00:10 MAYS IBRAHIM (ABU DHABI)Content creators in the UAE have started applying for the Advertiser Permit launched on Wednesday, embracing it as a crucial step towards legal clarity and professional recognition in the fast-growing content by the UAE Media Council, the permit will take effect in three months and applies to anyone engaged in paid or unpaid promotional work online, including apply to those promoting their own products, services, or company, and to under-18s engaged in educational, athletic, cultural, or awareness permit is free for the first three years, and holders must display their permit number on all social media accounts and platforms. Speaking with Aletihad , Ahmad Al Jamal, a UAE-based entrepreneur, content creator, and economic expert, noted that this regulatory move would ultimately support sustainable growth in the content economy. 'The content economy is globally promising, and the government's proactive approach in regulating this industry will ensure its sustainability and position the UAE as an attractive destination for content creators and entrepreneurs,' he Jamal noted that licensing boosts the credibility of content creators, earning them audience trust and professional recognition, which leads to more collaboration opportunities and increased income. The Advertiser Permit establishes clear standards and expectations for digital advertising in the UAE, according to Al Jamal.'When applying for the permit, creators are encouraged to familiarise themselves with the country's media rules and best practices, with guiding videos they must watch to move to the next step in the application,' he explained. This licensing process benefits regulators, creators, and viewers by creating a healthier, more sustainable industry, added Al entrepreneur and content creator Yousuf Saleh Abdulla also believes that the permit will open new doors for entrepreneurship in content creation. 'With a clear and official framework now in place, content creators in the UAE can work with more confidence and earn greater trust from public and private entities,' Abdulla told Aletihad . Abdulla believes that this regulatory move reflects a government vision to transform digital creation into a real thriving economy, underpinned by professionalism and transparency.'From my own experience, the industry has become more organised and business-focused. Regulation and licensing elevate content creation from a hobby to a serious profession, creating new growth opportunities.' Abdulla noted that licensing shows that the UAE recognises content creators as key players in shaping its media landscape, not just as entertainers, but as contributors to the country's digital image and public dialogue.

Dubai Summer Sale Sees 40% Digital Sales Surge and Rise in Cross-Border Orders
Dubai Summer Sale Sees 40% Digital Sales Surge and Rise in Cross-Border Orders

Hi Dubai

time2 hours ago

  • Hi Dubai

Dubai Summer Sale Sees 40% Digital Sales Surge and Rise in Cross-Border Orders

Despite the low season, the Dubai Summer Sale is going to be a new Black Friday for the summer months in the UAE, driven by cross-border orders and promotional discount campaigns from brands. Flowwow, a UAE-based gifting marketplace, and Admitad, a global performance marketing company, conducted a joint e-commerce research, analysing over 2 million online orders during the summer season from June 27 to August 31 in the UAE and MENA. With the Dubai Summer Surprise (DSS) 2024 campaign (also known as Dubai Summer Sale), the merchandise revenue grew by 15% with a 40% share of mobile commerce orders. UAE Summer Sales Insights Flowwow's summer gift sale in 2024 saw a significant year-over-year boost, with GMV up by 160.2% and the number of sales increasing by 162% in the Emirates. According to Admitad data for e-commerce orders, in the UAE, the number of online orders grew by 12%, and Gross Merchandise Value (GMV) increased by 15%. Accompanied by a rise in average order value from $69 to $75, this growth was fuelled by mobile shopping, cross-border orders during the holiday summer season, and Gen Z's highly digital habits. Sales in the low season are being boosted by the Dubai Summer Sale in both online and in-store shopping, as UAE brands work to maintain growth during the off-season by offering special deals, discounts, and promotional campaigns like 'Shop, Scan & Win'. Analytics forecast a further 15% rise in online orders for the Dubai Summer Surprise 2025. Mobile commerce kept growing in MENA, with the share of purchases made on mobile devices increasing from 39% to 40% in the summer. Smartphones contributed 79% of 2024 sales in total, confirming mobile's primacy in the UAE e-commerce market. According to Flowwow and Admitad analysts, the share of mobile orders will continue to grow by 10% in 2025. MENA Regional Summer Trends The UAE and Kuwait were leading the region in summer shopping, recording the highest average order values (AOV) during the 2024 season. Kuwait topped the list with an AOV of $120, followed by the UAE at $75. Other key markets included Jordan ($55), Saudi Arabia ($52), and Qatar ($50), all showing healthy levels of consumer spending across various retail categories. Across the MENA region, online sales experienced notable year-on-year growth: the number of orders during summer increased by 12%, while Gross Merchandise Value (GMV) rose by 21%, with part of this growth attributed to inflation. The Average Order Value (AOV) in MENA saw a rise from $30 to $36. Saudi Arabia also saw positive dynamics, with an 8% increase in order volume and a 16% boost in GMV in 2024. During summer, the average order value in the Kingdom climbed from $48 to $52. This rise is partially attributed to inflation and increasingly digital consumer habits, especially among Gen Z consumers. Data shows that approximately 60% of UAE consumers have made at least one online purchase from an international retailer. Moreover, over 80% of the UAE online shoppers buy from international websites via global e-commerce platforms like Amazon and AliExpress. These global e-commerce giants and niche marketplaces are driving cross-border orders to and from the UAE, underscoring the growing popularity of shopping across international markets. Flowwow internal data proves this trend and shows a 20% increase in demand for cross-border gifting during the summer season of 2024. While many UAE residents travel abroad during the summer, more and more people are ordering gifts online — either from other countries to the UAE or from the UAE to loved ones abroad. Leading countries in this trend include the United Kingdom (17%), the United States of America (15%), Russia (12%), Saudi Arabia (10%), Germany (5%), France (5%), the Netherlands (4%), Kazakhstan (4%), Spain (4%), Turkey (4%), Italy (3%) and several others. This rise in cross-border gifting reflects broader patterns. International travel bookings by UAE residents surged by 35% in July and August 2024 compared to the previous year, according to travel agencies. Europe accounted for 65% of all UAE visa requests in Q2, highlighting a strong seasonal trend as millions of UAE residents travel abroad during the summer. 'The growth in cross-border orders shows just how open and globally connected the UAE market is. During the Dubai Summer Sale, we see people not only shopping for themselves, but also sending gifts abroad — connecting with friends and family across different countries. With its diverse, multicultural population and strong e-commerce market, the UAE has become a key destination for international shopping. At Flowwow, we're proud to support that by making cross-border gifting easier and more convenient.' — said Slava Bogdan, CEO at Flowwow. Leading Summer Categories Summer 2024 shopping data reveals clear category preferences across the MENA region, with Fashion leading the way at 21% of total purchases. Home & Garden (19%) and Electronics (18%) follow, showing that consumers remain focused on both lifestyle upgrades and tech essentials. 'Dubai Summer Sale, one of the leading shopping moments of the year, shows strong interest in fashion and high demand for seasonal clothing and accessories in the UAE. Fashion leads with 28% of all e-commerce purchases in the country: local consumers are buying fashion items both in malls and online, using global e-commerce platforms for cross-border orders. The sales season is also driving increased interest in car products among UAE consumers and the growing influence of seasonal sales' — Anna Gidirim, CEO at Admitad, commented. Among other leading categories in the UAE, Electronics (17%) and Home & Garden (14%) also remain popular, while increased spending on Car Products (11%) and Toys & Hobbies (7.5%) points to a broader focus on home life, family, and mobility. Flowers (60%), cakes and bakery products (15%) became the leaders of gifting orders in the UAE, alongside edible bouquets of strawberries (5%), balloons (4%), and houseplants (3%). Saudi Arabia shows a similar pattern, with Fashion (22%), Electronics (19%), and Home & Garden (15%) topping the list. Car Products (10%) and Toys & Hobbies (7%) continue to draw consumer interest during the summer season. The Dubai Summer Sale is changing the way people shop in the summer, driving a wave of online spending, cross-border gifting, and mobile-first purchases, helping the UAE's e-commerce market, now worth over $8.80 billion, to grow.

Inaugural Abu Dhabi World Grappling Championship gets underway in Al Ain
Inaugural Abu Dhabi World Grappling Championship gets underway in Al Ain

Khaleej Times

time3 hours ago

  • Khaleej Times

Inaugural Abu Dhabi World Grappling Championship gets underway in Al Ain

The inaugural Abu Dhabi World Grappling Championship 2025 will officially begin on Friday, August 1, at ADNEC Centre Al Ain. Organised by International Vision Sports Management (IVSM), the three-day event will run until August 3 and is expected to bring together hundreds of athletes from more than 20 countries to the Al Ain Region, Abu Dhabi. This initiative is held in partnership with the Department of Culture and Tourism – Abu Dhabi (DCT) and under the banner of Abu Dhabi Jiu-Jitsu Pro (AJP). The official press conference to announce the completion of preparations was held Thursday at ADNEC Centre Al Ain and was attended Saeed Al Dhaheri, Destination Management Department Director at the Department of Culture and Tourism – Abu Dhabi and Tareq Al Bahri, General Manager of International Vision Sports Management. Several top athletes participating in the event, including Fellipe Andrew (Brazil), Leticia Cardozo (Brazil), Tamerlan Eslemesov (Russia), Liisi Vaht (Estonia), Salem Al Qubaisi (UAE), and Pouya Rahmani (Iran) were also present. Saeed Al Dhaheri, Director of Destination Management at the Department of Culture and Tourism – Abu Dhabi, said, 'Hosting the inaugural edition of the Abu Dhabi World Grappling Championship in Al Ain Region is an unprecedented milestone for the Middle East and North Africa region. It reflects the growth of the sports sector in the UAE and strengthens our position as a global hub for elite combat sports events. 'This event aligns with the Department's strategic vision to meet rising global demand for combat sports, including grappling, which is one of the world's fastest-growing disciplines. At the Department of Culture and Tourism — Abu Dhabi, we believe in the power of sports to bring people together, stimulate the tourism economy, and deliver exceptional experiences, particularly in Al Ain Region, a city rich in cultural heritage and natural beauty.' Tareq Al Bahri, General Manager of IVSM, said the organising team is fully prepared to deliver a seamless and high-calibre experience for both athletes and fans. He added that the strong international turnout reflects the sport's rapid global growth and Abu Dhabi's rising profile as a destination for combat sports. The competition will begin with professional and 35+ category matches through to the semi-final stage on the opening day. The youth and amateur divisions will take place on the second day, while the final day will feature third-place playoffs and championship finals for the professional categories. Winners will receive 2,000 AJP ranking points and substantial cash prizes, under AJP Tour regulations.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store