Here’s What You Need to Know About the UAE’s New R&D Tax Incentives Program
Businesses investing in research and innovation can now benefit from Phase 1 of the UAE’s R&D tax incentives program, which offers non-refundable tax credits of up to 50% on qualifying expenditure capped at AED5 million.
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The UAE Ministry of Finance (MoF) has launched the Phase 1 of its Research and Development (R&D) Tax Incentives Program, aimed at encouraging companies to invest more in innovation and strengthening the country’s position in advanced industries and emerging technologies.
Under the first phase launched in March 2026, businesses can receive a non-refundable tax credit of up to 50% on qualifying R&D spending, capped at AED5 million.
The UAE R&D tax credit applies a tiered structure where companies receive different credit rates based on their R&D spending levels and staffing: 15% on the first AED1 million of qualifying R&D spend (minimum 2 R&D staff); 35% on the next AED1 million up to AED2 million (minimum 6 staff); and 50% on spending between AED2 million and AED5 million (minimum 14 staff).
The Ministerial Decision No. 24 of 2026 on the Implementation of Certain Provisions of Cabinet Decision No. 215 of 2025, sets out that an activity will qualify as R&D under the UAE framework if it meets all five conditions: it must be novel, creative, uncertain, systematic, and transferable or reproducible.
The incentive was designed in line with developments under the OECD Pillar Two framework, where a non-refundable credit is expected to provide a more predictable effective tax rate for companies operating in the UAE’s evolving tax environment.
According to the Ministry, it also reflects the early stage of the country’s Corporate Tax regime, with Phase 1 structured to deliver immediate support for genuine R&D activity while allowing authorities to assess uptake, economic impact, and inform future policy development.
Insights from this initial rollout will feed into Phase 2, which could include broader enhancements such as a refundable tax credit or expanded eligibility for qualifying R&D expenses, depending on policy reviews.
The UAE Ministry of Finance (MoF) has launched the Phase 1 of its Research and Development (R&D) Tax Incentives Program, aimed at encouraging companies to invest more in innovation and strengthening the country’s position in advanced industries and emerging technologies.
Under the first phase launched in March 2026, businesses can receive a non-refundable tax credit of up to 50% on qualifying R&D spending, capped at AED5 million.
The UAE R&D tax credit applies a tiered structure where companies receive different credit rates based on their R&D spending levels and staffing: 15% on the first AED1 million of qualifying R&D spend (minimum 2 R&D staff); 35% on the next AED1 million up to AED2 million (minimum 6 staff); and 50% on spending between AED2 million and AED5 million (minimum 14 staff).
Entrepreneur Middle East Staff
Entrepreneur Staff
