By Bill Anderson, FCCA, Chief Executive Officer — Assetica, Dubai, UAE
Definition: Intangible asset valuation in the UAE is the process of estimating what identifiable non-monetary assets without physical substance are worth, such as brands, trademarks, patents, software, customer relationships and licences. It is needed after acquisitions under IFRS 3, when setting royalties, when moving intellectual property between group companies, and in disputes or financing. The main methods are relief-from-royalty, multi-period excess earnings, with-and-without and the cost approach.
Assetica provides independent intangible asset valuation in the UAE from Barsha Heights, Dubai. We value brands, trademarks, technology, customer relationships and licences to RICS, IVS and IFRS standards. Intangibles are often what a buyer is really paying for. They are also the figures an auditor, the FTA or an opposing expert will probe hardest, because each one rests on judgement. So every royalty rate, attrition curve and discount rate in our reports is sourced, and the parts are reconciled to the value of the whole business. We have completed over 500 valuations across 15+ countries. We do not broker deals or take success fees, so nothing rides on the answer.
Most intangible valuations are triggered by an event. The clearest is an acquisition. IFRS 3 requires the buyer to recognise identifiable intangibles at fair value, separately from goodwill. Goodwill, and any intangible judged to have an indefinite life, is then tested for impairment every year under IAS 36. Licensing and franchising need a royalty rate that the other side cannot easily pick apart. Moving a trademark, a software platform or customer contracts between group companies is a related-party transaction under UAE Corporate Tax. It therefore usually needs an arm's length value at the transfer date. Other triggers include contributing IP to a joint venture, and financing where a lender or investor wants the IP valued on its own. Disputes are another, including those before the DIFC and ADGM courts. Each purpose carries a different basis of value, so we fix the purpose first.
Not if you built it yourself. IAS 38 Intangible Assets prohibits recognising internally generated brands, mastheads, publishing titles, customer lists and similar items. For in-house technology, research costs are expensed and development costs are capitalised only when strict criteria are met. A brand reaches the balance sheet when it is bought, either on its own at cost or inside a business combination at fair value. In an acquisition, an intangible is recognised if it is separable or arises from contractual or legal rights. An assembled workforce does not qualify and stays in goodwill. A brand the buyer plans to retire still needs a fair value, judged from a market participant's view. IAS 38 also says no active market can exist for brands, patents or trademarks, so they cannot be revalued upwards. Moving a brand into a group IP company does not put it on the consolidated balance sheet, because intra-group transfers are eliminated. The price still matters for tax and for each company's own accounts.
There are three approaches: income, market and cost, and the income approach does most of the work. Relief-from-royalty asks what the owner would pay to license a brand, trademark or patent if it did not own it. The present value of those after-tax royalties is the asset's value. It works best where comparable licences exist. The multi-period excess earnings method values the primary asset, usually customer relationships or core technology. It takes that asset's cash flow, deducts a contributory asset charge for every supporting asset, and discounts the rest. With-and-without values an asset as the gap between two forecasts, one with it and one without, and suits non-compete agreements. The cost approach, usually the replacement cost method, measures what an asset of equal utility would cost, less obsolescence, and suits internally built software. Intangibles rarely sell on their own, so market evidence mainly supports royalty rates. IVS 210 Intangible Assets sets out these methods, along with the greenfield method for some licences and the distributor method for some customer relationships.
UAE Corporate Tax, under Federal Decree-Law No. 47 of 2022, charges 9 per cent on taxable income above AED 375,000. Related-party transactions must meet the arm's length principle. When a trademark or software platform moves from a mainland company to a free zone entity, the price needs support. Book value or a nominal figure is the obvious weak point, and an intra-group royalty faces the same test. UAE guidance refers to the OECD Transfer Pricing Guidelines, so legal title alone does not settle who earns the return. Qualifying Group relief can move an asset at net book value. If the asset leaves the group within two years, or the companies stop qualifying, the gain is clawed back, measured at market value on the original transfer date. A Qualifying Free Zone Person cannot use that relief or join a Tax Group. Its trademark income is not qualifying income, and patent or copyrighted software income qualifies only under a nexus ratio. Your tax adviser confirms the position. We supply the independent value.
A report that survives review states its purpose, basis of value and valuation date at the outset. A fair value for the accounts, a market value for a sale and an arm's length price for the FTA can each give a different figure. It then identifies each asset and the legal rights behind it: registrations, owners, territories and licence terms. It explains why each method was chosen and why the alternatives were rejected. Every input has a source, from the royalty evidence and the revenue attributed to the asset to attrition, the discount rate and the useful life. It states whether a tax amortisation benefit is included. Sensitivity tables show how the answer moves when key assumptions change. Finally, it reconciles. In an acquisition, the net assets at fair value, plus goodwill, must add back to the price paid. The returns assigned to each asset should also average back to the cost of capital, a check called the weighted average return on assets. Auditors test that reconciliation early.
The first mistake is a royalty rate taken from a rule of thumb, rather than from comparable licences adjusted for scope, territory and exclusivity. The second is applying that rate to total group revenue instead of only the sales the brand actually drives. The third is counting the same cash flow twice, once in the brand and again in the customer relationships. Applying the company's own discount rate to every asset is another, because a single asset rarely carries the same risk as the whole business. Some valuations assume an indefinite brand life without evidence. Others overlook legal title. A trademark held in a founder's own name, or software written by contractors who never assigned their rights, may not belong to the company being valued. Timing matters too: a value reconstructed long after the event is harder to defend. Finally, a brand ranking produced for marketing answers a different question from a fair value, and should not be quoted as one.
Scoping Call: We confirm purpose, assets, basis of value and valuation date, then fix the fee and timetable in writing before work starts.
Rights and Data Review: We check ownership, registrations and licence terms, then gather revenue by product, margins, customer history and the licensing evidence the rates will rest on.
Valuation and Testing: Each asset is valued with the method that suits it. Every rate is sourced, sensitivities are run and the parts are reconciled to the whole.
Report and Review Support: You receive a report stating purpose, basis, methods, sources and limitations. We then take your auditor, tax adviser or counterparty through the workings.
What are the different methods for valuing intangible assets?
There are three approaches: income, market and cost, and the income approach dominates in practice. Relief-from-royalty is used for brands, trademarks and patents. The multi-period excess earnings method is used for customer relationships and core technology. With-and-without is used for non-compete agreements and key contracts. The cost approach suits internally built software and assets without their own income stream. Market evidence mainly supports royalty rates, because whole intangibles rarely sell on their own.
How is brand value calculated for a UAE business?
Brand value is usually calculated with the relief-from-royalty method. We isolate the sales the brand actually drives, then apply a royalty rate drawn from comparable licence agreements and adjusted for scope and territory. The royalties saved are stated after tax and discounted over the brand's remaining useful life. The result is then checked against the value of the whole business, so the brand is not credited with value the business does not have.
Can an internally generated brand be recognised as an intangible asset?
No. IAS 38 prohibits recognising internally generated brands, mastheads, publishing titles, customer lists and similar items, however much they are worth. A brand reaches the balance sheet only when it is acquired, either separately or in a business combination under IFRS 3. Even then, it cannot be revalued upwards later, because IAS 38 says no active market can exist for brands, patents or trademarks. A homegrown brand's value shows up instead in a sale price, a buyer's purchase price allocation or a transfer pricing file.
What is the difference between brand valuation and trademark valuation?
A trademark is a legal right, while a brand is the wider commercial asset built around it. The trademark protects a registered name, logo or mark in defined classes and territories. IAS 38 treats brand as a marketing term for a group of complementary assets, such as a trademark, trade name, recipes and know-how. In an acquisition, these can be recognised as one asset when their useful lives are similar. The legal scope still sets what can be licensed or sold.
How is a royalty rate chosen for a brand or trademark valuation?
The royalty rate comes from comparable licence agreements, not from a rule of thumb. We look for licensing evidence on similar assets in the same or a related sector. We then adjust for what the licence actually covers: exclusivity, territory, term and the support the licensor provides. The rate is cross-checked against the profit the branded business earns, because no licensee would pay away most of its margin. The source of the rate and every adjustment are disclosed in the report.
Do I need a valuation to transfer IP between group companies in the UAE?
Usually, yes. A trademark, software platform or customer contract moving between companies under common control is a related-party transaction under UAE Corporate Tax. The price must be arm's length, and book value or a nominal figure rarely meets that test. The main exception is a transfer inside a Tax Group, where transactions between members are eliminated. Where Qualifying Group relief is claimed, a clawback within two years is measured at market value on the original transfer date. Your tax adviser confirms the treatment, and we provide the independent number.
What information is needed for an intangible asset valuation?
The core is evidence of ownership and evidence of earnings. That means trademark and patent registrations, licence and franchise agreements, and the assignment terms in employee and contractor contracts. On the financial side, we need revenue by product, brand or customer, margins, marketing and development spend, and customer history going back as far as it exists. For an acquisition we also need the deal model and the completion balance sheet. Gaps are not fatal, but they widen the range.
How much does intangible asset valuation cost in Dubai?
Assetica does not publish a price list, because the fee depends on the purpose, the number of assets and the state of the data. We fix the fee in writing after a scoping call, before any work starts. Timing is confirmed on the same call and is usually driven by how quickly the data can be gathered. We take no success fees, and the fee does not depend on the value we reach.