For UAE corporate tax purposes, depreciation is a deductible expense — reducing taxable income each year over the asset's life rather than all at once when purchased. Common depreciation methods include straight-line (equal amount each year) and reducing balance (higher in early years). The method chosen must be applied consistently and disclosed in financial statements. If you purchase a delivery vehicle for AED 120,000 with a six-year useful life, straight-line depreciation would deduct AED 20,000 per year from taxable income.
Pro tip: Businesses that have made significant CapEx investments — server infrastructure, manufacturing equipment, fit-outs — often benefit from a depreciation schedule review at corporate tax registration to ensure they are claiming all available deductions.
See also: Capital Expenditure (CapEx), Fixed Assets, Taxable Income
