For tax periods or fiscal years commencing on or after 1 January 2026, entities conducting Qualifying R&D Activities in the UAE may be eligible for an up to 50% R&D Tax Credit, which may be used to offset UAE Corporate Tax or UAE Domestic Minimum Top-up Tax liability, or be transferred to another entity (subject to complying with certain conditions).
Key points
Availability of R&D tax credit
The R&D Tax Credit is calculated using tiered percentages of Qualifying R&D Expenditure in the relevant Tax Period:
- 15% applicable on first AED 1 million (subject to a minimum of 2 R&D employees);
- 35% applicable on portion between AED 1 million and AED 2 million (subject to a minimum of 6 R&D employees); and
- 50% on portion between AED 2 million and AED 5 million (subject to a minimum of 14 R&D employees).
Eligibility criteria
Eligibility for an R&D Tax Credit is subject to various conditions and should be assessed on a case-by-case basis. Notably, expenditure needs to:
- comprise specific ‘qualifying’ expenditure (such as staff costs, consumables, subcontracting costs, arm’s length allocation under cost contribution arrangements, other categories of expenditure notified in a decision issued by the Minister, and these costs where they are capitalised as internally generated intangibles as per applicable accounting standards);
- be incurred wholly and exclusively on Qualifying R&D Activities (meeting specific parameters and which are not excluded activities);
- be deductible in nature;
- not be funded directly or indirectly by a grant;
- meet a minimal financial threshold of AED 500,000 per R&D Project per Tax Period or Fiscal Year;
Administrative requirements
Taxpayers will need to obtain pre-approval for the R&D Project(s) from the Emirates Research and Development Council and provide documentation supporting the R&D claim (and comply with certain ongoing requirements). Ongoing consideration should also be given to claw back provisions for tax credits unduly received, specific and general anti-abuse rules.
Although Cabinet Decision 215/2026 refers to the potential for Tax Credits to be refundable, the current R&D Tax Credits as implemented through Ministerial Decision 24/2026 are not refundable.
Unutilised R&D credits in a relevant Tax Period or fiscal year may be carried forward.
