What counts as a 'Capital Asset' under UAE VAT?

For UAE VAT purposes, a 'Capital Asset' has a specific, narrow definition: a single item of business expenditure of AED 5 million or more, excluding VAT, on which VAT was actually charged, and with an estimated useful life of at least 10 years for a building (or part of one) or at least 5 years for any other qualifying asset, such as heavy machinery or equipment. Ordinary business purchases below this value, or with a shorter useful life, don't count, no matter how important they are to the business.

Once something qualifies as a Capital Asset, it falls under the Capital Assets Scheme, which requires the business to monitor how it's actually used — taxable or exempt — over its full useful life, not just at the time of purchase, and to adjust the input VAT it recovered if that usage changes materially in later years. A company that builds a warehouse and initially uses it fully for taxable activities, then later leases part of it out under an exempt arrangement, would need to adjust its earlier VAT recovery accordingly. RASEEKH tracks qualifying capital assets for clients so these adjustments aren't missed at year end.