Читать книгу Ultimate guide on GCC Taxation - Павел Игоревич Герасимов - Страница 12

A depreciation deduction is allowed under the following limitations as stipulated by the law:

● The asset is not intended for resale and is to be used, in full or in part, for the entity’s purposes.

● The asset is of a depreciable nature that loses value because of use or because of wear and tear and obsolescence and has a value extending beyond the end of the taxable year.

● The asset is owned by the business, as per the ownership document for buildings and contracts and invoices for other assets.

● The asset depreciation is allowed even if the asset becomes inactive during the tax year.

Depreciation for tax purposes is calculated as follows, based on the following five categories of depreciable tangible or intangible assets, other than land:

The declining-balance method of depreciation, according to the above rates, should be followed for tax purposes. However, straight-line depreciation is allowed for Zakat payers as per Zakat regulations.

There are also rules for depreciation relating to assets either acquired or disposed of. Essentially, 50 % of the allowable acquisition price or disposal proceeds is added to or subtracted from the asset pool in the first year, and the remaining 50 % in the following year.

From 1 January 2018, the cost base of assets transferred or distributed between companies that are part of the same group should be set at the net book value.

Assets under build, own, and transfer (BOT) and build, own, operate, and transfer (BOOT) are allowed to be depreciated over the contract period. This presumes, although it is not clear, that assets under the BOT and BOOT schemes actually will have a separate grouping in addition to the above prescribed groups.