Can I Claim Depreciation on Plant & Equipment as a Business Expense in United Arab Emirates?
Yes, depreciation of plant, equipment and fixtures is deductible against Corporate Tax. The UAE follows IFRS for accounting depreciation, and tax depreciation generally aligns to accounting unless specific tax rules apply. Depreciation is calculated from the date the asset is ready for use, and it is deducted over its useful life under IFRS.
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What Federal Tax Authority (FTA) says
Tax depreciation under UAE Corporate Tax follows the accounting (IFRS) treatment unless specific rules apply (e.g., immovable property held for investment can elect realisation basis). Depreciation must be on assets actually used in the business. A person can elect the realisation basis for immovable property and intangible assets, which means a gain or loss is recognised when the asset is sold and not as it is depreciated. The election should be made with care and applied consistently. Assets must be used in the business to be depreciated, and depreciation stops when the asset is sold or disposed of.
When you can claim
- Computers, laptops and IT equipment
- Office furniture and fit-out
- Vehicles used for business
- Specialised equipment for the trade
- Leasehold improvements spread over the lease term
- Computers and equipment purchased by the business and written down over the useful life used in the accounts
When you cannot claim
- Depreciation on personal-use assets
- Depreciation above cost (e.g., revaluation gains)
- Land (not depreciable)
- Impairment or revaluation charges, which are dealt with under separate rules
Good to know
Pro tip: Keep a fixed asset register with the cost, the purchase date, the useful life and the depreciation charge. When the accounting policy changes, record the date and the reason, because the tax figure follows the financial statements.
Important: VAT paid on a capital asset is recoverable in the return for the period of purchase if it relates to taxable supplies. A capital asset with a value above the threshold set in the VAT rules may be subject to the capital asset scheme if the use changes later.
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