1. Reasonable amounts for the depreciation obsolescence, exhaustion, and depletion during the taxable year of properties used by the taxpayer in trades or businesses from which income taxable under this Law may be derived – such amounts for each taxable year shall be equal during the estimated remaining years of useful life of the properties or determined on such other basis as may be approved by the Minister and the taxpayer – provided that such amounts in the aggregate shall not exceed the value of the respective properties as defined in para (b) hereof, the amounts deducted in respect of any property used in the production and extraction from the ground in Bahrain of crude oil and other natural hydrocarbons may, at the option of the taxpayer, be amounts representing in each taxable year that fraction of the value of the property as defined in para (b) hereof which equals the fraction which the crude oil produced and extracted from the ground in Bahrain in the taxable year represents of the estimated total potential production and extraction of crude oil from the ground in Bahrain by the taxpayer as from the beginning of the taxable year. For the purposes of this paragraph, expenditures, which are capital in nature and are made in connection with the acquisition of any interest in crude oil or other natural hydrocarbons in the ground in Bahrain are recoverable in accordance with the aforesaid manner. Amounts shall not be deducted as depreciation if they are to be included in cost under any other head.
  2. The value of properties on the basis of which the amount of deductions for depreciation, obsolescence, exhaustion, and depletion under the para (a) and the amount of deductions for property losses under para (a) are determined, shall be the original cost of the property increased by the amount of all expenditures chargeable to capital account and decreased by losses and by depreciation, obsolescence, exhaustion, or depletion allowable in the manner provided for herein in respect of the property. Where an amount has been allowed for any taxable year for depreciation, obsolescence, exhaustion, or depletion in respect of any property that amount shall be the same amount previously allowable for that taxable year under this Article. In the case of property acquired by a taxpayer prior to the first taxable year during which such taxpayer was liable to the income tax imposed by this Law, the adjustment for depreciation, obsolescence, exhaustion and depletion previously allowed shall, for the purposes of this Article, be computed as if this Law entirely had been in force and had been applicable during the period in which the acquisition of the property was effected.

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