A fixed asset register lists every capital item you own, what it cost, how it is being depreciated and what it is worth now. Under UAE corporate tax it stopped being an accounting nicety and became the schedule your tax computation depends on — because depreciation is deductible, and a deduction you cannot evidence is one the FTA can deny.
What the fixed asset register must contain
Per asset, not per category:
- Unique identifier or tag number
- Description and physical location
- Date of purchase and supplier
- Cost, including everything capitalised into it
- Useful life and depreciation method
- Accumulated depreciation and net book value
- Date and proceeds of disposal, where applicable
The register must agree to the general ledger. A register that does not reconcile to the fixed asset control account is a finding, and it is one of the quickest tests an auditor performs.
Capitalise or expense?
Capitalise where the item will provide economic benefit beyond the current period and the cost can be measured reliably. Expense where it will not.
Cost includes purchase price, non-recoverable duty, delivery, installation and any cost of getting the asset into working condition. It excludes training, administrative overhead and recoverable VAT.
Set a written capitalisation threshold — typically AED 3,000 to 5,000 for an SME — and apply it consistently. Without one you either capitalise keyboards or expense a server, and both distort the accounts. Subsequent expenditure follows the same logic: a repair that restores an asset is an expense, an upgrade that extends its life or capacity is capitalised.
Useful lives
IFRS does not prescribe rates; you estimate the period over which the asset will be used. Common UAE practice:
| Asset class | Typical useful life |
|---|---|
| Buildings | 20–40 years |
| Leasehold improvements | Shorter of lease term and useful life |
| Plant and machinery | 5–15 years |
| Motor vehicles | 4–5 years |
| Furniture and fixtures | 4–7 years |
| Computers and IT equipment | 3–4 years |
Leasehold improvements are the UAE-specific trap. Fitting out a leased office and depreciating it over ten years, when the lease runs three, overstates assets and understates cost. Depreciate over the shorter period, and revisit if the lease is renewed.
The corporate tax dimension
Accounting depreciation is generally the starting point for the deduction in your corporate tax computation, which means three things now matter more than they used to:
- Evidence. A deduction claimed on assets you cannot support with invoices and a register is a deduction at risk.
- Consistency. Changing useful lives to manage a result invites challenge. Changes must be genuine reassessments, applied prospectively and disclosed.
- Private use. Assets used personally — the classic being a vehicle available to a director — raise both a deductibility question and a blocked input VAT question. Those are different rules reaching the same asset.
Physical verification
Count the assets at least annually, as you would inventory. Tag them, walk the premises, and confirm each item on the register exists and is in use.
Almost every business doing this for the first time finds ghost assets — items long since scrapped, stolen or replaced, still sitting on the register and still being depreciated. That overstates assets, understates expense in the year of loss, and inflates a deduction you are not entitled to. Write them off when found and document what happened.
Disposals
On disposal, remove both cost and accumulated depreciation, and take the difference between proceeds and net book value to profit or loss as a gain or loss. Do not simply credit the proceeds to income and leave the asset on the register — a surprisingly common error that leaves the balance sheet permanently wrong.
Keep evidence of the disposal: the sale invoice, or for a scrapping, a signed internal note recording what was disposed of and why.
Impairment
Depreciation spreads cost over time. Impairment is different — it recognises that an asset’s recoverable amount has fallen below its book value. Assess for indicators annually: idle assets, damage, obsolescence, or a business unit performing well below plan. Where impaired, write down immediately rather than accelerating depreciation, which is not the same thing.
Frequently asked questions
What is a fixed asset register?
A detailed schedule of every capital asset owned, with cost, useful life, depreciation method, accumulated depreciation and net book value, reconciling to the general ledger.
What capitalisation threshold should we use?
Typically AED 3,000 to 5,000 for an SME. The specific figure matters less than setting it in writing and applying it consistently.
Are depreciation rates fixed by UAE law?
No. IFRS requires you to estimate useful life. There are common practices by asset class, but they are estimates you must be able to justify.
How do I depreciate leasehold improvements?
Over the shorter of the lease term and the improvement’s useful life. Using a longer life than the lease is a common error.
Is depreciation deductible for UAE corporate tax?
Accounting depreciation is generally the starting point for the deduction, subject to the corporate tax rules and to being properly evidenced.
What are ghost assets?
Assets still on the register that no longer physically exist. They overstate assets and inflate depreciation deductions, and annual verification is how you find them.
How often should we verify assets physically?
At least annually, ideally aligned with year end so the register supports the balance in the accounts.