UAE fixed assets: maintain a fixed asset register with cost, useful life, depreciation method, accumulated depreciation, and carrying value per asset. UAE CT allows deduction of depreciation per IFRS (no separate tax depreciation rates). Asset disposal gain = proceeds minus carrying value (not original cost) — taxable income if the asset was used in the business.
What a UAE fixed asset register must contain
| Field | Notes |
|---|---|
| Asset description | Make, model, serial number where applicable |
| Asset category | Computers, furniture, vehicles, leasehold improvements, etc. |
| Date of purchase | Determines depreciation start date |
| Cost (AED) | Purchase price + directly attributable costs (installation, transport) |
| Estimated useful life | Years — set per IFRS / management judgement |
| Depreciation method | Straight-line or reducing balance (must be consistent) |
| Annual depreciation | Cost / useful life (straight-line); or carrying value × rate (reducing balance) |
| Accumulated depreciation | Total depreciation charged to date |
| Net carrying value | Cost minus accumulated depreciation |
| Date of disposal | If asset sold, scrapped, or transferred |
| Disposal proceeds | Cash received (or market value for non-cash transfers) |
| Gain or loss on disposal | Proceeds minus carrying value at disposal date |
Depreciation methods used in UAE
UAE Corporate Tax Law does not prescribe specific depreciation rates — it follows the taxpayer’s financial accounting treatment under IFRS (or the applicable accounting standard). Two methods dominate:
- Straight-line method: Cost divided by useful life. A AED 100,000 computer with a 5-year life: AED 20,000/year. Simple, predictable, most common for furniture, equipment, and leasehold improvements.
- Reducing balance method: Depreciation rate applied to the carrying value each year. A AED 100,000 vehicle at 25% reducing balance: Year 1 = AED 25,000; Year 2 = AED 18,750 (25% of AED 75,000). Front-loads depreciation — common for vehicles.
Once you select a depreciation method for an asset class, you must apply it consistently. Switching from straight-line to reducing balance to accelerate deductions is not permitted without a genuine change in accounting policy with appropriate disclosure in the financial statements.
Asset disposal — CT treatment
When a UAE business disposes of a fixed asset (sells, scraps, or transfers), the gain or loss is:
- Disposal proceeds minus carrying value = gain or loss. If the vehicle was fully depreciated (carrying value AED 0) and sold for AED 20,000, the gain of AED 20,000 is taxable income.
- Gain on disposal: Included in taxable income in the period of disposal. Not a capital gain — UAE CT does not distinguish between capital and revenue gains for business assets.
- Loss on disposal: Deductible as a business expense in the period of disposal.
- VAT on disposal: The sale of a business asset is a taxable supply. If your business is VAT-registered, charge 5% VAT on the disposal proceeds (unless the asset is being transferred as part of a going concern).
UAE depreciation rate chart by asset class
Start with the point that trips most people up: the UAE has no statutory depreciation rate table. There is no equivalent of an Indian Companies Act schedule or a UK capital allowances regime. Corporate Tax follows your accounting treatment under IFRS, so the rate in your books is the rate you deduct — provided the useful life you chose is reasonable and you apply it consistently.
What businesses actually need, then, is a defensible benchmark. The rates below are the useful lives commonly applied by UAE companies under IAS 16 and accepted in practice by auditors. Use them as a starting point and document any departure.
| Asset class | Typical useful life | Straight-line rate | Reducing-balance rate (indicative) |
|---|---|---|---|
| Computers, laptops, tablets | 3 – 4 years | 25% – 33.3% | 40% – 50% |
| Servers and network equipment | 4 – 5 years | 20% – 25% | 30% – 40% |
| Software and licences (capitalised) | 3 – 5 years | 20% – 33.3% | Not commonly used |
| Office furniture and fittings | 5 – 10 years | 10% – 20% | 15% – 25% |
| Office equipment (printers, AV) | 4 – 5 years | 20% – 25% | 25% – 33% |
| Motor vehicles — cars | 4 – 5 years | 20% – 25% | 25% – 33% |
| Motor vehicles — commercial / heavy | 5 – 8 years | 12.5% – 20% | 20% – 25% |
| Plant and machinery — light | 5 – 10 years | 10% – 20% | 15% – 25% |
| Plant and machinery — heavy industrial | 10 – 15 years | 6.7% – 10% | 10% – 15% |
| Tools and small equipment | 2 – 4 years | 25% – 50% | 40% – 50% |
| Leasehold improvements / fit-out | Over the lease term | 100% ÷ lease years | Not appropriate |
| Buildings (owned, excluding land) | 20 – 40 years | 2.5% – 5% | Not commonly used |
| Land | Not depreciated | — | — |
| Investment property at fair value (CT election) | Statutory rule, see below | 4% of original cost | Not applicable |
Because there is no official UAE rate table, an auditor or the FTA will test whether your useful life is commercially reasonable for the asset and applied consistently across the class. A three-year life on a building or a fifteen-year life on laptops will be challenged. Write down the basis for each class once, in an accounting policy note, and you have your answer ready.
Working out the rate from a useful life
Straight-line rate = 1 ÷ useful life in years. A five-year life is 20% a year; a four-year life is 25%; a three-year life is 33.3%. Reducing-balance rates are higher for the same life because the charge falls each year — the asset is never quite written to zero, which is why a residual value or a final-year write-off is needed.
Worked example — depreciation and the Corporate Tax deduction
A Dubai company buys a delivery van in March 2026.
| Item | Amount / basis |
|---|---|
| Invoice price | AED 120,000 |
| Registration, delivery and fitting out | AED 8,000 |
| Capitalised cost | AED 128,000 (purchase price plus directly attributable costs) |
| Useful life chosen | 5 years |
| Residual value estimated | AED 18,000 |
| Depreciable amount | AED 128,000 − AED 18,000 = AED 110,000 |
| Method | Straight-line |
| Annual depreciation | AED 110,000 ÷ 5 = AED 22,000 |
| Effective rate on cost | 17.2% per year |
| First-year charge (10 months, March to December) | AED 22,000 × 10/12 = AED 18,333 |
| Corporate Tax deduction, year 1 | AED 18,333 — the accounting charge, unchanged |
| CT saved at 9% | About AED 1,650 in year 1 |
Not the invoice date, and not the payment date. A machine delivered in November but not commissioned until January is depreciated from January. Getting this wrong is the most common first-year error, and it moves the deduction into the wrong tax period.
Note what does not happen here: there is no separate tax computation, no capital allowance pool and no adding back the accounting charge to substitute a statutory rate. Under UAE Corporate Tax the accounting depreciation is the deduction. The one significant exception is investment property held at fair value, below.
The one statutory rate: 4% on investment property at fair value
If your business holds investment property measured at fair value rather than at cost, you take no accounting depreciation at all — and until recently that meant no Corporate Tax deduction either. Ministerial Decision No. 173 of 2025 changed that, and it is the only place UAE Corporate Tax law puts an actual percentage on depreciation.
| Point | Rule |
|---|---|
| What you can deduct | The lower of 4% of the original cost of the property, or the tax written down value at the start of the tax period |
| Period | Per 12-month tax period, prorated for a shorter period |
| Precondition | You must elect the realisation basis for gains and losses under Article 20(3) of the Corporate Tax Law |
| Scope of the election | Applies to all qualifying investment properties held at fair value, not property by property |
| Is it reversible? | No. The election is irrevocable |
| When to make it | In the return for the first applicable tax period, the period the property is first acquired, or the first period after leaving Small Business Relief |
| Miss the deadline? | Eligibility is permanently lost |
| On disposal | The total depreciation claimed under the election is added back to taxable income, unless the transfer falls within the Tax Group or Article 26 / 27 reliefs |
| Applies from | Tax periods starting on or after 1 January 2025 |
This is a one-shot election made in a specific return. Property-holding companies that measure at fair value should decide before filing, not afterwards — there is no mechanism to go back and claim it later. Model the add-back on disposal too: the deduction is a timing benefit, not a permanent one.
Vehicle depreciation in the UAE — and the VAT trap
Vehicles get asked about more than any other asset class, partly because the depreciation is straightforward and the VAT treatment is not.
Depreciation
Passenger cars are typically depreciated over 4 to 5 years, giving 20% to 25% a year on a straight-line basis. Commercial and heavy vehicles run longer, 5 to 8 years. Residual values matter more for vehicles than for most classes — a car with a real resale value of AED 30,000 at the end of five years should not be depreciated to zero, and doing so overstates the deduction now and creates a taxable gain on sale later.
The VAT trap
| Vehicle situation | Input VAT on purchase | Input VAT on running costs |
|---|---|---|
| Car available for private use by staff | Blocked | Blocked in the same proportion |
| Pool car, business use only, kept at the premises | Recoverable if genuinely no private availability | Recoverable |
| Commercial vehicle (van, truck, bus) | Recoverable | Recoverable |
| Vehicle held as trading stock by a dealer | Recoverable | Recoverable |
| Vehicle used for a taxi or driving-school business | Recoverable | Recoverable |
The FTA looks at whether the vehicle could be used privately, not whether it actually was. A car that goes home with an employee each night is available for private use even if every trip is a business trip. If you intend to recover the input VAT, the vehicle needs to stay at the premises and you need a policy and a log that show it.
The VAT position does not change the depreciation. Where input VAT is blocked, it forms part of the capitalised cost of the vehicle and is depreciated along with the rest of it.
Seven fixed-asset mistakes that cost money at audit
| The mistake | Why it costs | What to do instead |
|---|---|---|
| Expensing assets below an arbitrary threshold with no written policy | Inconsistent treatment across years draws an audit query | Set a capitalisation threshold in writing (commonly AED 3,000 – 5,000) and apply it |
| Depreciating from the invoice date | Deduction lands in the wrong tax period | Depreciate from the date the asset is ready for its intended use |
| Depreciating land | Overstates the deduction; land has an indefinite life | Split the land and building components on any property purchase |
| Zero residual value on everything | Overstates depreciation now, creates a taxable gain on disposal | Estimate residual value for vehicles and heavy plant |
| Never removing disposed assets from the register | Ghost assets keep generating a deduction that does not exist | Reconcile the register to a physical count once a year |
| Switching methods to accelerate the deduction | Not permitted without a genuine policy change and disclosure | Choose per class at the outset and stay with it |
| Leasehold improvements written off over a standard 5 years | Wrong where the lease is 3 years or 10 years | Depreciate over the lease term, or the useful life if shorter |
Walk the office once a year with the register in hand and tick off what is actually there. Most UAE businesses running this for the first time find between 5% and 15% of the register no longer exists — assets scrapped, lost or replaced without anyone telling finance. Every one of those was still being depreciated.
Fixed asset register out of date?
We rebuild and maintain UAE fixed asset registers, calculate depreciation, and advise on CT and VAT treatment of disposals. Fixed fee.
Frequently asked questions
Does UAE have separate tax depreciation rates?
No. The UAE Corporate Tax Law follows the taxpayer’s financial accounting treatment (IFRS or applicable standard). There are no separate capital allowance rates or tax depreciation tables like those in some other jurisdictions. The depreciation rate in your accounts is the CT deduction.
Is a gain on selling a business asset taxable in UAE?
Yes. Gains from selling business fixed assets (e.g., selling a fully depreciated vehicle for AED 30,000) are included in taxable income. UAE CT does not have a separate capital gains tax — all disposal gains from business assets are income.
Do UAE businesses charge VAT when selling fixed assets?
Yes — if VAT-registered. Selling a business asset is a taxable supply. Charge 5% VAT on the disposal proceeds. Exception: if assets are sold as part of a going concern transfer (entire business sale), a VAT relief may apply — advice specific to the transaction is recommended.
How long should UAE businesses keep fixed asset records?
7 years under the UAE Corporate Tax Law. The fixed asset register, purchase invoices, depreciation schedules, and disposal records must be retained. FTA auditors may review these to verify depreciation deductions in CT returns.
What is the useful life for common fixed assets in UAE?
Common IFRS/industry estimates: computers 3–5 years, office furniture 5–10 years, vehicles 3–5 years, leasehold improvements over the lease term, machinery 5–15 years. UAE businesses may use shorter useful lives if there is commercial justification.
What is the depreciation rate in the UAE?
There is no statutory UAE depreciation rate table. Corporate Tax follows your IFRS accounting treatment, so the rate you use in your books is the rate you deduct. In practice UAE businesses apply: computers 25% to 33.3% (3 to 4 years), office furniture 10% to 20% (5 to 10 years), motor cars 20% to 25% (4 to 5 years), plant and machinery 6.7% to 20% (5 to 15 years), and buildings 2.5% to 5% (20 to 40 years). Leasehold improvements are written off over the lease term. The single statutory percentage in UAE Corporate Tax law is the 4% rule for investment property held at fair value.
Is there an official depreciation rate chart in the UAE?
No. Unlike jurisdictions with a prescribed schedule or a capital allowances regime, the UAE Corporate Tax Law accepts the depreciation recorded in your financial statements under IFRS or the applicable standard. What is tested is whether the useful life you chose is commercially reasonable for that asset and applied consistently across the class. Documenting the basis for each asset class in an accounting policy note is what makes it defensible.
What is the depreciation rate for vehicles in the UAE?
Passenger cars are typically depreciated over 4 to 5 years, which is 20% to 25% a year on a straight-line basis. Commercial and heavy vehicles run 5 to 8 years, or 12.5% to 20%. Set a realistic residual value rather than depreciating to zero, otherwise you overstate the deduction now and create a taxable gain when you sell. Separately, input VAT on a car that is available for private use is blocked, and that blocked VAT is capitalised into the cost and depreciated with it.
Can I claim depreciation on investment property held at fair value?
Yes, since Ministerial Decision No. 173 of 2025, for tax periods starting on or after 1 January 2025. The deduction is the lower of 4% of the original cost per 12-month period or the tax written down value at the start of the period. You must first elect the realisation basis under Article 20(3), the election covers all your fair-value investment properties, it is irrevocable, and it must be made in the return for the first applicable period — miss it and eligibility is permanently lost. On disposal the depreciation claimed is added back to taxable income.
Straight-line or reducing balance — which should a UAE business use?
Straight-line for most asset classes: it is simpler, it matches how office assets actually give up value, and it is what auditors expect. Reducing balance suits assets that lose most of their value early, typically IT hardware and some vehicles. The choice matters less than the consistency — once you set a method for an asset class you must keep it, and switching to accelerate a deduction is not permitted without a genuine change in accounting policy and disclosure in the financial statements.
When does depreciation start on a new asset in the UAE?
From the date the asset is ready for its intended use, not the invoice date and not the payment date. Equipment delivered in November but commissioned in January is depreciated from January. The first year is prorated for the number of months in use, so an asset ready in March gives ten twelfths of a full year’s charge.