# IFRS 16 lease calculator

> Under IFRS 16, a tenant records a lease liability equal to the present value of the lease payments, discounted at the rate implicit in the lease or its incremental borrowing rate, and a matching right-of-use asset. The asset is depreciated over the lease term and interest is charged on the liability, replacing the rent expense.

Interactive calculator: https://www.countify.ae/tools/ifrs-16-lease-calculator · Updated 2026-10-14 · Countify UAE

## Lease liability for AED 120,000 a year

Payments in advance, 6% discount rate.

| Term | Initial lease liability | Year 1 total P&L expense |
| --- | --- | --- |
| 3 years | AED 340,007.12 | AED 126,536.14 |
| 5 years | AED 535,812.67 | AED 132,111.29 |
| 10 years | AED 936,203.07 | AED 142,592.49 |

The P&L expense is higher than the rent in early years and lower later.

## Office leases in the UAE

Most UAE office leases run 1–3 years with annual cheques paid in advance, so choose "in advance". Leases of 12 months or less, and low-value assets, can be expensed as rent instead. Companies using IFRS for SMEs (revenue under AED 50 million can use it for tax) follow a simpler lease approach; our [year-end accounts team](https://www.countify.ae/services/year-end-accounts) can advise which applies.

## Legal basis

- IFRS 16 Leases (https://www.ifrs.org/issued-standards/list-of-standards/ifrs-16-leases/)

## Frequently asked questions

### What discount rate should I use for IFRS 16?

The rate implicit in the lease if known; otherwise your incremental borrowing rate, i.e. what you would pay to borrow a similar amount over a similar term.