Latest news with #MinisterialDecision
The National
2 days ago
- Business
- The National
Breaking down the new UAE corporate tax ruling on property
Two years into the UAE corporate tax universe, we continue to have changes to the law, so it is essential to keep up. Crammed within five short pages of the Ministerial Decision No. 173 of 2025 are a set of rules for treatment that demand the attention of those who have property investments. As an investment class, property can be used in different ways, particularly with how it interacts with tax and accounting. This holds true in any country due to how incentives are typically employed. Industrial, commercial and residential zones and within those categories, the level permitted within planning regulations. Planning rules are a function of the current version of an area's master plan. Where regeneration is required, rules tend to be much more relaxed. Starting with accounting treatment, we'll move on to the tax implications. The former must comply with international financial reporting standards (IFRS) to be considered in line with the various UAE regulatory authorities' laws. Some definitions to lay the ground. A depreciation charge recognises that a physical asset loses value over time, primarily from wear and tear, usage and general perceived value compared with new market offerings in the same space. The traditional approach is to declare a lifetime – say five years – and then take a charge to the profit and loss on an equal monthly basis until the original cost in financial accounts is zero. Impairment builds on this. Say you purchased a building in the Dubai International Finance District in 2009. We know there was a global recession and that property values were materially depressed. In 2025, the opposite is true. Our depreciation definition above suggests the building would be almost worthless in our financial accounts; however impairment says we must recognise the realisable value were it to be sold today. This is almost certainly much higher than the original purchase price. But surely you cannot account separately for both? The truth is that we separate the differing elements of the building. The core structure becomes a property asset and its innards, fixtures and fittings assets. The former is impaired annually and occupies a single accounting line. The latter is depreciated monthly and occupies as many lines as there are items. The UAE has relatively few mandatory annual financial reporting requirements. Large family and single-person-owned entities do not have shareholders to report to, and these make up a large part of the national economy. Hence there has been no oversight of the valuation of certain asset classes in company balance sheets. A building might never have had its fittings depreciated or an old building downwards impaired; one that is in need of demolishing and redeveloping. These buildings become purchase or whole entity takeover targets for wise corporate tax planners. Why? Until this ministerial release, if you could pay less than the accumulated write down to your net profit, you could reduce your tax bill. Years and years of unused tax credits. Article 2, section 1(a) caps the annual deductible value against corporate tax to 4 per cent of the original cost. While this closes a tax planning loophole, it raises a question I have asked before. From when does this law take effect? This is important, because it is possible that a reporting entity may have already submitted two tax returns that took full advantage of this scenario. Happily, this is dealt with in Article 7. It applies from the January 1, 2025. This will cover almost everyone. Yet, it is possible that an entity has both taken the tax benefit after this date and submitted a return. Say an entity with a March 2024 to February 2025 fiscal year, which filed in May 2025. What do they now do? The obvious answer is that they must file an amendment to their return having recalculated their final reported position. It'd be worth contacting the Federal Tax Authority for guidance, not unreasonably, as the legislation has just appeared, and confirm that they have acted in good faith, coupled with reporting in a very timely manner. There are additional exceptions that should be reviewed – groups and related parties in particular should carefully review and consider their positions, and any decisions already executed. For example, this decision does not apply to undeveloped or bare land. It applies specifically to investment properties. Would this include an entity's headquarters, and let us suppose that this is an iconic building or one in a strategic location, meaning its value is likely to rise? International Accounting Standard 40, the tape measure being used, says to me, no. Corporate lawyers, family offices and some wealthy individuals have much to reconsider here.
Time of India
4 days ago
- Business
- Time of India
UAE's 2025 tax update: How real estate firms can save on fair-valued assets
The UAE Ministry of Finance's new rule enables depreciation of fair-valued investment properties, offering firms fresh tax planning flexibility/Representative Image TL;DR: Finance Ministry's Ministerial Decision No. 173/2025 allows firms to deduct depreciation on investment properties measured at fair value, if they choose the realisation basis, effective from tax periods starting January 1, 2025. Companies can claim depreciation up to 4% of original cost or the account's written-down value for each 12‑month period. Tax expert insights, including Aldar, highlight greater planning flexibility and equitable treatment across fair-value and historical-cost assets. The "realisation basis" election is irrevocable and introduces fresh tax planning tools, though firms must navigate 'claw‑back' provisions. Businesses in the UAE are adjusting to new tax guidelines that affect how they report the value of their property assets. The Ministry of Finance has introduced specific provisions under the Corporate Tax framework that govern how companies can depreciate property assets that are recorded at fair value, a method that reflects the current market worth of assets, rather than historical purchase prices. This change is particularly important for companies that follow International Financial Reporting Standards (IFRS), as many real estate developers, investment firms, and asset-heavy industries in the UAE do. Under the new rule, even when a property's value rises on the balance sheet due to market appreciation, the depreciation expense claimed for tax purposes will still be based on the asset's original cost, not the higher market value. Experts believe this offers clarity and prevents businesses from inflating depreciation deductions to reduce tax liabilities. According to UAE tax professionals cited in a local news outlet Al Etihad, the move is a strategic clarification aimed at aligning tax practices with international standards while safeguarding the UAE's new corporate tax system from loopholes. What the New Rule Says Who it affects : Businesses holding investment properties using fair value accounting under IFRS. Eligibility condition : Must opt for the realisation basis, meaning gains are taxed on disposal, not annual book adjustments. Depreciation cap : Up to 4% of original cost or the written-down value, prorated for partial-year holdings. Election specifics : A one-time, irrevocable choice must be made in the first 2025 tax period. Once selected, it applies uniformly across all relevant properties. Claw-back rules : The decision includes guidance on reversal triggers particularly transfers or revaluations, so companies must track annual changes meticulously. Applicability : Regardless of whether fair value assets were held before or after June 1, 2023, the corporate tax implementation date coverage begins from January 1, 2025. Context: Why This Matters Previously, firms using fair value accounting received no depreciation tax benefit, unlike those using historical cost, who could deduct depreciation expenses annually. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Beyond Text Generation: An AI Tool That Helps You Write Better Grammarly Undo As The National describes it, this was 'a significant change from prior practice,' bringing parity and compliance clarity. Gulf News explains that the rule's goal is to 'create tax fairness between firms using fair value and historical cost methods', a move widely welcomed by developers and financial leaders. Voices from the Market In Al Etihad's interview, experts emphasised the significance of Ministerial Decision 173/2025: Aldar Properties , speaking to Al Etihad, applauded the decision for enhancing 'tax neutrality and equity' and called it a 'progressive and well-calibrated step.' Aldar's finance chief notes this brings confidence for capital deployment in its Dh25.8 billion assets under management. Aurifer's founding partner, as reported in The National, explained that the rule allows firms choosing the realisation basis to claim depreciation, smoothing taxable profits and aligning tax treatment with economic reality. Practical Implications for Businesses Strategic Tax Planning Firms can now choose whether to hold properties at market or historical value, factoring in current outlay, potential long-term gains, and timing. Cashflow Benefits Depreciation deductions can improve near-term cash flow by reducing taxable income and corporate tax liabilities, especially during early years of holding. Clarity & Compliance Confidence With guidelines on claw-back events, firms can manage transitions, inter-company transfers, and development scenarios more precisely. Investor Appeal Developers like Aldar believe the reform supports investor confidence and better capital allocation in the real estate sector. Key Considerations & Risks Irrevocable election : Once chosen, companies cannot revert, requiring comprehensive internal assessments before opting in. Annual calculations : Depreciation must be tracked and documented precisely, balancing reported gains and written-down values. Claw-back vigilance : Should revaluation events occur, firms need robust systems to comply with reversal rules. Compliance timing : Businesses must make the election in their first 2025 tax period, often aligning with the calendar year, so deadlines must be prioritized. Broader Tax Landscape This decision is part of a broader pattern of refining the UAE's Corporate Tax Law (Decree-Law 47/2022), which introduced a 9% base rate starting June 1, 2023, for profits exceeding AED 375,000. As per WAM, in 2025, corporate tax registration passed 576,000 entities, indicating widespread uptake. Additional 2025 reforms included tiered excise tax on sugary beverages and clarity on energy and digital taxation, further aligning the UAE with global fiscal standards. The 2025 depreciation rule for fair-valued investment properties marks a milestone in the evolution of UAE corporate taxation. By restoring parity between reporting methods and enabling depreciation allowances, the Ministry has introduced real planning levers for firms, particularly in real estate. As various interviews in local news outlet confirms, the move is more than administrative: it reinforces the UAE's reputation for fiscal clarity, fairness, and investor-friendly regulations.
Daily Tribune
5 days ago
- Health
- Daily Tribune
Workplaces Ordered to Station First-Aid Trained Staff
TDT | Manama First-aid trained staff must now be present at every Bahraini workplace under new Health Ministry rules aimed at preventing injuries from becoming fatal. The decision, published in the latest edition of the Official Gazette, lays out new requirements for employers across the private sector. Each site must be ready to deal with medical emergencies, and help must be called at once if someone is badly hurt or suddenly falls ill at work. Names One trained person is needed for every 20 workers, and their names must be kept in a log on site. They must hold a recognised certificate showing they've completed at least one course in first aid. Supplies Another employee must be named to check supplies and deal with inspectors when needed. First-Aid Kits Workplaces must keep first-aid boxes stocked with items listed in a table attached to the ministerial order. These kits must be easy to find and checked regularly to ensure everything is usable. One box is needed for every 100 workers or fewer. Emergencies Employers must also put together a plan for emergencies. This should include ambulance contacts, maps showing the nearest clinic, and a layout of exits. The order forms part of Ministerial Decision No. 16 of 2025, signed by Health Minister Her Excellency Dr. Jaleela bint Al Sayed Jawad Hassan. It replaces a 1976 rule on what first-aid boxes should contain. Anyone breaching the new rules may face punishment under Article 192 of the 2012 Labour Law or Article 129 of the Public Health Law, depending on the offence. The decision takes effect the day after it appears in the Gazette.
Al Etihad
18-07-2025
- Business
- Al Etihad
Aldar welcomes new UAE tax depreciation decision as a positive step for real estate sector
18 July 2025 15:15 ABU DHABI (ALETIHAD)Aldar has welcomed the UAE Ministry of Finance's new Ministerial Decision on Depreciation Adjustments for Investment Properties held at Fair Value, calling it a positive and progressive development for the real estate sector under the UAE Corporate Tax decision, issued under Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses, allows taxpayers who elect the realisation basis to deduct tax depreciation from their taxable income on investment properties held at fair value. The depreciation amount permitted will be the lower of the tax written down value or 4% of the original cost of the property per 12-month tax period, or prorated for shorter Ministry's move ensures tax neutrality by aligning deductions with those available to businesses using historical cost accounting, thereby promoting equity across different reporting standards. The decision also clarifies the application of tax depreciation in various scenarios including property transfers between related or third parties, developments, and claw-back events. This is expected to support clearer compliance planning and improved financial foresight for Falaknaz, Group Chief Financial and Sustainability Officer at Aldar, praised the decision, saying: 'Aldar expresses its gratitude for the UAE Ministry of Finance for this progressive and well-calibrated step, which reflects a deep commitment to fairness, clarity, and international best practices in the implementation of the Corporate Tax Law. By enabling depreciation deductions for investment properties held at fair value, this decision creates parity between different accounting treatments, helping companies plan long-term capital deployment more effectively. It will also reinforce investor confidence, attract institutional capital, and enhance the UAE's standing as a transparent, competitive, and globally integrated investment destination—particularly for the real estate sector.' Aldar, which operates through two primary divisions—Aldar Development and Aldar Investment—holds a significant income-generating property portfolio across commercial, retail, residential, and logistics segments. As of 31 December 2024, Aldar Investment's portfolio had a gross asset value of Dh25.8 billion and generated Dh2.5 billion in EBITDA for the year.
Gulf Today
17-07-2025
- Business
- Gulf Today
MoF issues Decision on Depreciation Adjustments for Investment Properties held at Fair Value
The UAE Ministry of Finance (MoF) has issued a new Ministerial Decision regarding Depreciation Adjustments for Investment Properties held at Fair Value for the Purposes of Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses. Under this decision, taxpayers (who elect for the realisation basis) can elect to deduct depreciation from their taxable income (hereafter known as 'tax depreciation') for investment properties that are held on a fair value basis. The tax depreciation deduction available will be the lower of the tax written down value of the investment property or 4 percent of the original cost of the investment property, for each 12-month tax period or otherwise prorated for part of the tax period, during which the relevant investment property is held, and will be available to taxpayers who hold investment properties prior to and/or after the introduction of corporate tax. The decision provides clarity as to the value upon which tax depreciation can be claimed depending on whether the investment property is transferred between related parties or third parties or has been constructed/developed by the taxpayer. The decision provides parity between taxpayers who hold investment properties on a historical cost basis, who can already benefit from a deduction for accounting depreciation, with those who hold investment properties on a fair value basis. To avail this benefit, this decision therefore requires taxpayers to make this irrevocable election in their first Tax Period beginning on or after 1 January 2025 in which they hold an investment property and such election will apply to all investment properties going forward. Given the realisation basis must have been elected for by taxpayers wanting to benefit from the tax depreciation election, and that the realisation basis election is generally made in the first Tax Period, the decision also allows for an exceptional window for taxpayers to opt in to elect for the realisation basis to avail the tax depreciation deduction. Finally, the decision provides guidance on when the claw-back of tax depreciation may occur in instances outside of a disposal of an investment property such that taxpayers are aware of their tax compliance obligations and are able to accurately assess their returns on investment property. The release of this decision reflects the Ministry's commitment in ensuring a level playing field for all taxpayers, thus enhancing the principles of tax neutrality and equity in the UAE Corporate Tax regime and ensuring such deductions are aligned with international best practice. WAM
