With the introduction of MD No. 173 of 2025, taxpayers holding investment properties at fair value face a critical opportunity and responsibility to align their tax position with the new depreciation framework. The implications are far-reaching, and timely action is essential.
It is recommended that taxpayers take the following steps without delay:
- Prioritize the selection of the realization basis: If a company holds investment properties in its first fiscal year under Corporate Tax, the election to apply the realization basis and consequently claim depreciation, must be made in the first Tax Return. Missing this deadline may result in a permanent loss of the deduction.
- Review the investment property portfolio: Identify all assets measured at fair value and assess whether they qualify under the new depreciation framework.
- Model the tax impact: Evaluate how the depreciation deduction and realization basis will affect the organization’s taxable income, both immediately and over time.
- Prepare robust documentation: Ensure that the Original Cost, Opening Value, and Tax Written Down Value are well-supported and audit-ready.
This is a time-sensitive decision with long-term tax consequences. To navigate this change effectively, we encourage you to connect with our seasoned tax advisory team. At KPMG, we bring deep expertise in UAE Corporate Tax and can help you assess your position, model scenarios, and ensure your elections are made accurately and on time.
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