Depreciation schedules for fit-out, IT and vehicles under UAE corporate tax

Key Takeaways

• The UAE has no separate capital allowance regime: the depreciation charged in your IFRS accounts is the corporate tax deduction, provided the useful life applied is reasonable and consistent.
• A specific rule under Ministerial Decision No. 173 of 2025 lets businesses holding investment property at fair value under IAS 40 claim a 4% annual depreciation deduction based on original cost, an exception to the normal book-follows-tax approach.
• The FTA expects a fixed asset register showing each asset's description, acquisition date, original cost, useful life, depreciation method, accumulated depreciation, and net book value, not just a total depreciation charge in the P&L.
• Because there's no separate tax schedule to fall back on, an unreasonable useful-life assumption in your accounts flows straight through into an unreasonable tax deduction, making the assumption itself the thing worth getting right.

Businesses used to jurisdictions with a published capital allowance table, a fixed percentage per asset class, tend to look for the UAE equivalent and not find one. That's not a gap in the guidance, it's the actual rule: corporate tax depreciation in the UAE runs off your accounting depreciation directly, which shifts the real decision from "what rate does the tax law allow" to "what useful life is defensible for this specific asset."

Why there's no separate tax depreciation table

UAE corporate tax follows the accounting treatment under IFRS: there are no separate capital allowance rates or tax depreciation tables, the depreciation rate in your accounts is the corporate tax deduction, provided the useful life chosen is reasonable and applied consistently (The National, UAE corporate tax: how to account for fixed and depreciating assets, retrieved 2026-09-08). This is a materially different structure from jurisdictions where accounting depreciation and tax depreciation diverge, sometimes significantly, and get reconciled through a separate schedule. In the UAE, get the accounting useful-life estimate wrong, and the tax deduction is wrong in exactly the same way, with no separate mechanism to correct it at the tax return stage.

Setting useful life for fit-out, IT and vehicles specifically

The useful lives commonly applied under IAS 16, and accepted in practice by UAE auditors, are the practical starting point rather than a UAE-specific statutory rate (Emirabiz, understanding depreciation in the UAE, retrieved 2026-09-08). For the three asset categories this article is about:

Fit-out typically depreciates over the length of the underlying lease or the asset's physical useful life, whichever is shorter, since leasehold improvements have no value once the lease ends regardless of the physical condition of the fit-out itself. A five-year lease with fit-out expected to last ten years physically still depreciates over five, because that's the period the business actually benefits from it.

IT equipment generally carries a short useful life, commonly three to five years, reflecting realistic technology refresh cycles rather than the equipment's theoretical physical lifespan. Applying a vehicle-length useful life to laptops and servers would understate depreciation and, correspondingly, overstate taxable income.

Vehicles typically sit in a longer band, often five years or more depending on usage intensity and the specific fleet, tracked individually via the fixed asset register described below rather than as a single blended fleet rate.

Since the accounting rate is the tax rate, an unreasonably long useful life on any of these categories, applied to lower book depreciation expense for other reasons (a cleaner P&L, a covenant test), directly and proportionally understates the corporate tax deduction available in the same period.

The investment property exception

One category runs on a different rule entirely. Ministerial Decision No. 173 of 2025 allows businesses holding investment property measured at fair value under IAS 40 to claim a 4% annual depreciation deduction for corporate tax purposes, calculated on original cost, even though fair-value accounting under IAS 40 doesn't itself charge depreciation through the P&L (QASP Global, UAE corporate tax depreciation rules 2026, retrieved 2026-09-08). This is the one place the "book depreciation equals tax deduction" principle doesn't hold, because fair-value investment property generates no book depreciation to follow, so the law supplies a fixed rate instead. It doesn't apply to fit-out, IT, or vehicles, which are firmly inside the standard book-follows-tax approach.

What the FTA actually expects on file

Beyond the depreciation charge itself, the FTA requires a fixed asset register showing, per asset: description, date of acquisition, original cost, useful life, depreciation method, accumulated depreciation, and net book value (The National, retrieved 2026-09-08). A single blended depreciation line in the P&L, without an underlying register that supports it asset by asset, is a common audit finding precisely because it can't demonstrate that any individual asset's useful life was reasonable, only that the aggregate charge looks plausible. Run your planned capex and expected useful lives through the UAE corporate tax calculator to see the deduction's effect on taxable income before committing to a specific useful-life policy across asset categories.

Frequently asked questions

Can I use a shorter useful life to increase my tax deduction in the current year?

Only if that shorter useful life is genuinely reasonable for the asset in question and applied consistently, not selected purely to accelerate the deduction. Since there's no separate tax schedule to fall back on, an aggressive useful-life assumption is exposed directly in your accounts, where it's the kind of assumption an auditor or the FTA would test for reasonableness.

Does the 4% investment property rule apply to my office fit-out?

No. It applies specifically to investment property held at fair value under IAS 40. Fit-out, IT equipment and vehicles remain under the standard rule: accounting depreciation is the tax deduction, based on a reasonable useful life.

What happens if I don't maintain a fixed asset register?

It's a documented FTA expectation and a common point of audit friction if missing. Without a register showing acquisition cost, useful life, and accumulated depreciation per asset, a business can't substantiate that its aggregate depreciation deduction was calculated on a reasonable basis, which puts the deduction itself at risk in a review.

The bottom line

UAE corporate tax depreciation isn't a separate calculation layered on top of your accounts, it's a direct pass-through of your accounting depreciation, which makes the useful-life assumptions you set for fit-out, IT and vehicles a tax decision as much as an accounting one. Get those assumptions right, and keep the fixed asset register that proves it, since there's no separate tax schedule standing between an unreasonable estimate and an unreasonable deduction. As depreciation charges compound across a growing asset base, it's worth folding this review into a broader financial health check rather than revisiting useful-life assumptions in isolation each year.

Figures were verified on 8 September 2026 against published UAE corporate tax and IFRS depreciation guidance, including Ministerial Decision No. 173 of 2025. Useful-life assumptions should be confirmed with a registered UAE auditor for your specific asset categories before finalising a depreciation policy.