Latest news with #UAEMinistryofFinance
Arabian Post
19-07-2025
- Business
- Arabian Post
UAE Clarifies Tax Depreciation Rules on Fair‑Valued Properties
The UAE Ministry of Finance has introduced Ministerial Decision No. 173 of 2025, establishing clear rules for applying depreciation adjustments to investment properties held at fair value under the corporate tax regime. The decision allows businesses that choose the realisation basis to deduct tax depreciation, addressing a long-standing ambiguity in the treatment of such assets. Under the new rules, eligible taxpayers may deduct whichever is lower: the tax written-down value of the property, or 4 per cent of the property's original cost for each 12-month tax period. In cases where the tax period differs from a full year, the deduction is prorated accordingly. This provision applies to properties held both before and after the introduction of corporate tax, beginning with tax periods from 1 January 2025. The decision requires taxpayers to make an irrevocable election for the realisation basis in their first tax period starting on or after 1 January 2025 in which they hold an investment property; once selected, the choice applies to all future such properties. To accommodate those yet to make the election, the Ministry has granted an exceptional opt-in window enabling taxpayers to secure these depreciation benefits. ADVERTISEMENT Tax practitioners describe the move as enhancing fairness and aligning the UAE with international best practices. It establishes parity between owners of properties under historical cost accounting—already entitled to depreciation—and those adopting fair value accounting. According to the official announcement, the decision offers comprehensive guidance on various scenarios, including transfers between related and unrelated parties, development projects, and claw-back situations. This ensures clarity in calculating tax obligations and supports accurate return forecasts from investment assets. Industry reactions underline the practical benefits and strategic implications of the decision. Aldar Properties, Abu Dhabi's leading listed developer, welcomed the changes. Faisal Falaknaz, Group Chief Financial and Sustainability Officer, described the measure as a 'progressive and well-calibrated step' that affirms equity and supports long-term capital planning under the corporate tax law. He added that the decision will reinforce investor confidence and enhance the UAE's competitiveness as a global real estate destination. Aldar's investment arm holds a property portfolio valued at Dh25.8 billion as of 31 December 2024, and this clarification could affect similar entities across the sector. Financial and tax advisory firms emphasised the immediate cash flow advantages from the depreciation allowance. Anurag Chaturvedi, CEO of Andersen UAE, noted that the absence of depreciation claims on fair-valued properties previously led to higher taxable profits and increased tax liabilities. Now, with the new decision, firms opting for the realisation basis may reduce their taxable income by as much as 4 per cent of the original purchase cost per year. Thomas Vanhee, founding partner of Aurifer, described the decision as harmonising tax treatment with common economic lifespans of properties. He explained that businesses using fair value accounting now gain access to depreciation benefits comparable to those using historical cost without requiring an asset sale. Industry analysts have drawn attention to important caveats. Businesses should note that once they elect the realisation basis, they cannot reverse the decision. Moreover, property disposals or transfers—especially within corporate groups—could trigger claw-back provisions, meaning previously claimed deductions might be recouped by tax authorities. Gaurav Keswani, managing director of JSB in Dubai, urged companies to exercise caution, emphasising the importance of long-term strategic planning. He warned that misjudging the choice between realisation and fair value methods could lead to unintended tax liabilities. The backdrop to the decision lies in the UAE's broader roll-out of federal corporate taxation. Introduced on 1 June 2023, the regime charges a 9 per cent rate on profits exceeding Dh375,000, with a threshold of Dh1 million in annual turnover for applicability. The depreciation clarification forms part of the government's continued efforts to refine and operationalise the tax framework for transparent business operations. Financial experts are awaiting further interpretative guidance from the Ministry of Finance and the Federal Tax Authority. This guidance is expected to cover nuances in depreciation calculations, accounting treatment, claw-back events, and interactions with wider tax provisions.
Arabian Business
18-07-2025
- Business
- Arabian Business
UAE to introduce sugar tax for beverages from 2026
The UAE will introduce a new tiered sugar tax from 2026 as it looks to promote public health and reduce consumption of sugary drinks. The UAE Ministry of Finance and Federal Tax Authority (FTA) announced a major revision to the excise tax framework on sugar-sweetened beverages (SSBs), introducing a new sugar-based tiered tax system that will take effect in early 2026. Unlike the current flat-rate model, the new system will link the tax per litre of beverage directly to its sugar content per 100ml—meaning the higher the sugar concentration, the higher the tax. UAE sugar tax This reform aligns with the UAE's national health strategy to reduce sugar consumption, combat lifestyle-related diseases, and promote healthier dietary habits among consumers. The amendment reflects a shift toward data-driven policy that incentivises manufacturers to reduce sugar levels in their products and empowers consumers to make more informed choices. It also supports regional efforts to harmonise tax policy across the Gulf and reinforces the strategic use of taxation as a tool to drive sustainable development. Developed in coordination with the Ministry of Health and Prevention, the new model is part of a long-term strategy to improve public health outcomes through fiscal legislation. Businesses—including importers, suppliers, and manufacturers—will have sufficient time to adapt, with comprehensive awareness campaigns and technical guidance set to launch ahead of the 2026 rollout. Further details, including implementing legislation and compliance requirements, will be released in the coming months.
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
Al Etihad
17-07-2025
- Business
- Al Etihad
Ministry of Finance issues ministerial decision on Depreciation Adjustments for Investment Properties held at Fair Value
17 July 2025 17:02 ABU DHABI (WAM)The UAE Ministry of Finance 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 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 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 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 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 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 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 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.
Hi Dubai
16-07-2025
- Business
- Hi Dubai
UAE Launches 2027–2029 Federal Budget Cycle with AI-Driven, Sustainable Vision
The UAE Ministry of Finance has launched the 2027–2029 federal budget cycle, marking a strategic evolution in the country's financial planning system. Designed to be more agile, efficient, and future-focused, the new cycle aligns with national ambitions under 'We the UAE 2031' and long-term goals of UAE Centennial 2071. Announced alongside the federal government's latest strategic planning framework, the new budget model redefines the federal budget from a static financial tool into a strategic enabler that supports national priorities, including education, healthcare, digital transformation, and sustainability. His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Prime Minister and Minister of Finance, noted that the upgraded financial system prioritises flexibility, proactivity, and impact. 'Our vision is to transform the federal budget into a future-ready instrument that drives sustainable growth and elevates the quality of government services to new heights,' he said. The cycle is supported by advanced technologies, including artificial intelligence and predictive analytics, to improve planning accuracy, accelerate execution, and ensure data-driven decision-making. AI will play a pivotal role in enhancing institutional efficiency and forecasting national needs more precisely. His Excellency Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs, highlighted that reforms have already led to significant improvements—budget preparation steps have been cut from 50 to 10, and procurement cycles now take under six minutes. The previous four budget cycles saw a combined allocation of approximately AED900 billion. The new cycle builds on this foundation, with public debt at AED62.1 billion as of June 2025, and federal government assets reaching AED464.4 billion by the end of 2024. This forward-looking model focuses on outcomes over expenditures, empowering federal entities to deliver impactful services, drive smart governance, and reinforce the UAE's position as a global leader in financial innovation. News Source: Dubai Media Office
