UAE Corporate Tax and Dubai Property
The 4% Depreciation Election, and Why the Deadline Matters
If you hold Dubai investment property inside a company that carries it at fair value, there is an election you can only make once — and only in a tax return. Ministerial Decision No. 173 of 2025 lets you deduct deemed depreciation you would otherwise never get. Here is how it works, what it costs you later, and who it does not apply to at all.
The Problem Fair-Value Accounting Creates
Start with who this does not apply to. An individual who owns a Dubai apartment and lets it on an ordinary tenancy is not in scope of UAE Corporate Tax on that rent — we set out that position, with the sources, in our guide to Dubai property tax. If that describes you, none of what follows changes anything.
This page is about the other case: property held inside a company that prepares accrual financial statements and carries its investment property at fair value under IAS 40. That is a very common structure among institutional and family-office owners of Dubai stock, and it creates a specific problem.
Under fair value accounting, a property that rises in value produces a gain in the profit and loss account before anything has been sold. Because UAE Corporate Tax starts from accounting profit, that unrealised gain would ordinarily be taxable — a tax bill on a revaluation, with no sale proceeds to pay it from. Article 20(3) of Federal Decree-Law No. 47 of 2022 answers this by allowing a taxable person to elect the realisation basis, so gains and losses are recognised only when they are actually realised.
That election solves one problem and creates another. A company on the realisation basis, holding property at fair value, is not running the property through a cost-and-depreciation model — so it has no depreciation charge to deduct. An owner holding an identical building at historic cost would deduct depreciation every year; the fair-value owner would deduct nothing. Ministerial Decision No. 173 of 2025, published on 17 July 2025, closes that gap with a deemed depreciation deduction.
The Election at a Glance
Ministerial Decision No. 173 of 2025
Every Rule That Governs the Election, in Order
Each rule below is stated as published, with the source named. Where a figure or a step could not be verified from a source retrieved for this guide, it has been left out rather than estimated.
| Rule | What It Says | Effect |
|---|---|---|
| Corporate Tax rates | 0 per cent on taxable income up to AED 375,000 and 9 per cent on taxable income above AED 375,000, under Federal Decree-Law No. 47 of 2022. | The rate that applies |
| Real estate is in scope | The UAE Government’s official platform lists real estate management, construction, development, agency and brokerage among the business activities within the scope of Corporate Tax. | Sector confirmed |
| Realisation basis | Article 20(3) of the Corporate Tax Law allows an election to recognise gains and losses on a realisation basis, rather than as they arise on revaluation. | Prerequisite |
| What qualifies | Investment Property as defined in IAS 40 — a building or part of a building held to earn rental income, for capital appreciation, or both — measured at fair value. Right-of-use assets under leases are included. | Asset test |
| Land is excluded | Land is excluded and must be separated from the overall value of the property. Depreciation applies only to the portion attributable to the building. | Split the valuation |
| The deduction | The lower of 4 per cent of the original cost of the property, or the tax written down value at the beginning of the tax period. Applied for each 12-month tax period and prorated for shorter periods. | Lower of the two |
| When to elect | In the tax return for the first tax period in which the property is held, the period in which it is first acquired, or the first tax period after exiting Small Business Relief. | One window |
| Irrevocability | Once made, the election is irrevocable and applies to all qualifying investment properties held at fair value. Missing the window forfeits the right permanently. | Permanent |
| First applicable period | The decision applies to tax periods beginning on or after 1 January 2025. Depreciation cannot be claimed retroactively for 2024. | From 2025 |
| Clawback on realisation | On a realisation event — sale, derecognition, cessation of business, a switch from the fair value model to the cost model, or becoming an exempt person — the aggregate depreciation previously deducted is added back to taxable income. Transfers within a tax group, and those falling under Articles 26 or 27, are excluded. | Deferral, not relief |
| Filing deadline | A taxable person must file the tax return with the Federal Tax Authority no later than nine months from the end of the relevant tax period, and settle the Corporate Tax payable within the same nine months, under Article 53 of the Corporate Tax Law. | Nine months |
| Late filing penalty | Under Cabinet Decision No. 75 of 2023, failure to submit a Corporate Tax return in time attracts AED 500 for each month or part thereof for the first twelve months, and AED 1,000 for each month or part thereof from the thirteenth month. | Accrues monthly |
Sources: rates and sector scope per the Official Platform of the UAE Government (u.ae), Corporate Tax page, last updated 30 March 2026. Ministerial Decision No. 173 of 2025 detail per DLA Piper, “Ministry of Finance introduces tax depreciation rules for investment properties measured at fair value”, published 17 July 2025, and KPMG Lower Gulf, “Ministerial Decision No. 173 of 2025 on Depreciation Adjustments for Investment Properties Held at Fair Value”. Article 53 filing rule per Federal Decree-Law No. 47 of 2022, the text of which the Ministry of Finance publishes at mof.gov.ae. Penalties per Cabinet Decision No. 75 of 2023, also published by the Ministry of Finance. All retrieved 7 September 2026. This is general information, not tax or legal advice.
Six Things to Establish Before the Return Is Filed
Because the election is irrevocable and is made inside the return itself, the work has to happen before filing, not after. These are the six questions that decide whether the election is available and whether it is worth making.
The 30 September 2026 date shown above is derived arithmetic, not a separately published deadline: it is the nine-month Article 53 filing rule applied to a tax period running 1 January to 31 December 2025. A company with a different financial year end has a different date. Confirm your own filing date with the Federal Tax Authority or your tax adviser.
Holding Dubai property through a company?
TruHauz can help you assemble the property-side facts your tax adviser will ask for — cost records, valuations and the land-building split.
What the Election Is Actually Worth
The single most common misreading of this decision is to treat it as a tax saving. It is not. It is a timing difference, and the value of a timing difference depends entirely on how long you hold.
It Is Deferral, Not Relief
Every dirham of depreciation deducted under the election is added back to taxable income on realisation. Over the whole life of the holding, the deduction nets to nothing. What you gain is the use of the money in the intervening years.
Hold Period Decides the Value
A long-hold owner defers tax for many years and keeps the cash working. An owner planning a sale in the near term defers it for a short time and then hands it back. The same election is worth a lot to one and very little to the other.
It Binds the Whole Portfolio
The election is not made property by property. It applies to all qualifying investment properties held at fair value, and it cannot be reversed. A structure holding assets with very different hold horizons has a genuine decision to make.
پرسشهای متداول
The questions property owners ask most often about UAE Corporate Tax and investment property held at fair value.
Not tax or legal advice. This guide is general information about published UAE Corporate Tax rules, compiled from the sources named above and retrieved on 7 September 2026. It is not advice on your circumstances, TruHauz is a real estate brokerage and not a tax adviser, and rules and decisions change. Before making or omitting any election, take advice from a qualified UAE tax adviser and confirm the current position with the Federal Tax Authority.
The Property Facts Your Adviser Will Ask For
TruHauz does not give tax advice. What we can do is assemble the property-side record your tax adviser needs — acquisition cost history, current valuations and the land-building split — on Dubai assets we know. Tell us what you hold.
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