OPEX vs CAPEX: Spend Smart, Borrow Smarter

Cloud software, store fit-outs, new laptops—what counts as operating expense (OPEX) and what is capital expenditure (CAPEX)? Classifying spend correctly affects taxes, depreciation, and financing choices.

Simple UAE Tests

1. Time Test
   Benefit lasts > 12 months? → likely CAPEX.
2. Tax Test
   Depreciable asset under UAE corporate tax? → CAPEX.
3. Cash-Flow Test
   Funding tenor should match asset life: short line for OPEX, long term loan or lease for CAPEX.

Typical Misclassifications

Item	Common Mistake	Correct Class
Annual SaaS licence paid up-front	Treated as CAPEX	OPEX (benefit < 1 yr)
Store refurbishment	Split into rent	CAPEX (depreciable fit-out)

Financing Tip

Bundle multiple small CAPEX items into a single term loan to avoid juggling ten tiny instalments.

Keywords: OPEX vs CAPEX UAE, expense classification, term loan, working-capital line, depreciation rules
Hashtags: #KlubAI #OpexVsCapex #FinanceTips #SMEAccounting #UAEBusiness

Disclaimer: For tax treatment, consult your accountant; blog figures are illustrative.