Article 1 - Definitions

Words and expressions in this Decision shall have the meanings specified in the Federal Decree-Law No. 47 of 2022 referred to above ('Corporate Tax Law'), and the following expressions shall have the meanings assigned against each, unless the context otherwise requires:

Article 2 - Election to Apply Depreciation to Investment Property Held at Fair Value

1. Where a Taxable Person that prepares Financial Statements on an Accrual Basis of Accounting has elected to take into account gains and losses on a realisation basis pursuant to Clause (3) of Article 20 of the Corporate Tax Law, it may make an irrevocable election that will result in an adjustment to its Taxable Income by applying, for an Investment Property held at fair value under the applicable Accounting Standards, a depreciation deduction of the lower of:

   1. 4% (four percent) of the Original Cost for each (12) twelve-month Tax Period, or prorated where the Tax Period is shorter or longer than (12) twelve months, or where the Investment Property is held for only part of the Tax Period.

   2. The Tax Written Down Value at the start of the relevant Tax Period.

2. Where Clause (1) of this Article applies, the Opening Value and Original Cost of the Investment Property for the purposes of Corporate Tax shall be determined in respect of the following:

   1. The transferor, in the case an Investment Property is transferred and the transfer is covered by Article 26 or 27 of the Corporate Tax Law or the transfer is between members of a Tax Group, other than the most recent transfer of that Investment Property which was not covered by any of the said Articles or was not between members of a Tax Group.

   2. The Taxable Person, in any other cases.

3. Where Clause (5) of Article 26 or Clause (7) of Article 27 or Clause (9) of Article 42 of the Corporate Tax Law applies to a transfer of Investment Property, the transferee shall adjust its Taxable Income, during the Tax Period in which any of the said Clauses apply, for a depreciation deduction elected for under Clause (1) of this Article that has not been previously adjusted by the transferee for that Investment Property due to the application of paragraph (a) of Clause (2) of this Article.

4. Where a Taxable Person makes an election pursuant to Clause (1) of this Article, the election shall apply to all of its Investment Properties held at fair value under the applicable Accounting Standards.

5. As an exception to Clause (3) of Article 8 of Ministerial Decision No. 134 of 2023 referred to above, a Taxable Person that prepares Financial Statements on an Accrual Basis of Accounting may elect to recognise gains and losses on a realisation basis in the Tax Return referred to in Article 3 of this Decision in which an election is made under this Decision.

Article 3 - Election Timeline

1. For a Taxable Person that holds an Investment Property during the first Tax Period to which this Decision applies, the election must be made in the Tax Return for that Tax Period.

2. For a Taxable Person that does not hold an Investment Property during the first Tax Period to which this Decision applies, the election must be made in the Tax Return for the Tax Period in which the first Investment Property is held.

3. For a Taxable Person that elected for Article 21 of the Corporate Tax Law to apply, the election must be made in the Tax Return for the first Tax Period in which that Article does not apply.

4. If an election is not made within the timelines specified in this Article, the Taxable Person shall be considered to have forfeited its right to make such an election.

Article 4 - Determination of Gain or Loss upon Realisation

1. For the purposes of this Decision, the realisation of an Investment Property in respect of which the election under Article 2 of this Decision has been made shall include the occurance of any of the following events, whichever is earlier:

   1. The sale, disposal, transfer, other than the transfers excluded under Clause (2) of this Article, settlement, complete worthlessness or other form of derecognition of the Investment Property as per the applicable Accounting Standards.

   2. Change of accounting policy in respect of the Investment Property from the fair value model to the cost model.

   3. The relevant Taxable Person becomes an Exempt Person or elects for the application of Article 21 of the Corporate Tax Law.

   4. Where the Taxable Person ceases its Business or Business Activity, whether by dissolution, liquidation, or otherwise.

2. Upon realisation of an Investment Property, other than in cases of transfers covered by Article 26 or 27 of the Corporate Tax Law or transfers between members of a Tax Group, the Taxable Income of the relevant Taxable Person shall be increased by the aggregate depreciation deduction, or pro-rated for partial realisations, it claimed under Clause (1) of Article 2 of this Decision.

3. For the purposes of Clause (2) of this Article, the aggregate deprecation deduction claimed by the transferor shall be attributed to the transferee if the transferor has ceased to be a Taxable Person.

4. Where any of the events referred to in paragraphs (a), (b) or (d) of Clause (1) of this Article occurs, the realisation adjustments shall be made in the Tax Period in which the relevant event occurs. Where any of the events referred to in paragraph (c) of Clause (1) of this Article occurs, the realisation adjustments shall be made in the last Tax Period prior to the occurrence of the relevant event.

Article 5 - Adjustments to Taxable Income

1. Where an Investment Property is transferred and the transfer is covered by Article 26 or 27 of the Corporate Tax Law or the transfer is between members of a Tax Group, the Taxable Income of the transferee using the cost model shall be adjusted to exclude any depreciation, amortisation, or other change in the value of the Investment Property, to the extent of the depreciation deduction claimed by the transferor under Clause (1) of Article 2 of this Decision in respect of that Investment Property.

2. Upon realisation of the Investment Property, other than in cases of transfers covered by Article 26 or 27 of the Corporate Tax Law or transfers between members of a Tax Group, the transferee shall adjust its Taxable Income to include any amount that has been previously excluded for Corporate Tax purposes under Clause (1) of this Article.

Article 6 - Specific Anti-Abuse Rule

Where an Investment Property is transferred between Related Parties, the Authority may, at its discretion, disallow the depreciation deduction claimed by the transferee under this Decision if the transaction or arrangement, or any part of it, is not for a valid commercial or other non-fiscal reason that reflects economic reality.

Article 7 - Application of this Decision to Tax Periods

This Decision shall apply to Tax Periods starting on or after 01 January 2025.

Article 8 - Publication and Application of this Decision

This Decision shall be published and shall come into effect on the day of its issuance.