R&D Tax Incentive
The UAE has introduced an R&D Tax Credit for Corporate Tax / Top-up Tax purposes.
It applies to tax periods or fiscal years starting on or after 1 January 2026.
Who can potentially claim
A UAE-incorporated or otherwise recognized juridical person (including a Free Zone Person) that is subject to Corporate Tax and/or Top-up Tax and carries on qualifying R&D activities; or
A foreign juridical person carrying on qualifying R&D activities in the UAE through a Permanent Establishment that is subject to UAE Corporate Tax and/or Top-up Tax on that PE income.
Core eligibility conditions
To claim, the entity must satisfy the following:
- Meet the minimum number of employees engaged in qualifying R&D activities - tiered, non-refundable R&D Tax Credit structure
- 15% on the first AED 1,000,000 of Qualifying R&D Expenditure (minimum 2 R&D staff)
- 35% on expenditure between AED 1,000,000 and AED 2,000,000 (minimum 6 R&D staff)
- 50% on expenditure between AED 2,000,000 and AED 5,000,000 (minimum 14 R&D staff)
- Obtain pre-approval from the Emirates Research and Development Council (ERDC/Council) and comply with ongoing requirements
- Bear the financial burden of the R&D
- Have a project with a genuine objective to increase knowledge or devise new applications of existing knowledge; and comply with the wider rules issued by the Minister, Council, and Authority
What costs may qualify
- Staff costs - Qualifying Staff Costs benefit from a 30% uplift to reflect overheads reasonably attributable to R&D activities
- Consumable costs
- Subcontractor costs
Cost conditions
Costs only qualify if they are:
- At least AED 500,000 per R&D project per Tax Period or Fiscal Year - incurred exclusively for qualifying R&D, or apportioned to the qualifying part only
- Not funded directly or indirectly by a Grant, to the extent recorded in the financial statements; and not already benefiting from another UAE incentive, credit, exemption, or relief
How the benefit works
The credit is calculated as a percentage of qualifying R&D expenditure.
It is then used against Corporate Tax and/or Top-up Tax liabilities.
