Corporate Tax Update – Investment Properties at Fair Value

The UAE Ministry of Finance has issued Ministerial Decision No. 173 of 2025, introducing an optional and more stable corporate tax treatment for investment properties measured at fair value.

Key Highlights

Optional depreciation instead of fair value taxation Taxable persons may make an irrevocable election to compute taxable income on a realisation basis and claim tax depreciation, instead of recognising annual unrealised fair value movements.

Fixed depreciation cap Depreciation is allowed at 4% of the original cost per year, limited to the tax written down value, ensuring a controlled and predictable tax deduction.

Mandatory consistency Once elected, the approach must be applied to all investment properties held at fair value, preventing selective application.

Depreciation clawback on exit Upon sale, disposal, restructuring, liquidation, or exemption, previously claimed depreciation is added back to taxable income.

Strong anti-abuse safeguards The FTA may deny depreciation where related-party transfers lack genuine commercial substance.

📄 The full Ministerial Decision No. 173 of 2025 is available via the PDF link: https://pdflink.to/2087beed/