The UAE has introduced a Research and Development (R&D) Tax Credit that lets eligible businesses reduce their Corporate Tax by up to 50% of their qualifying R&D spending. The Ministry of Finance launched the first phase of the programme on 18 March 2026, and it applies to tax periods starting on or after 1 January 2026.
This guide explains the credit rates, who qualifies, what spending counts, and how to claim it.
What Is the UAE R&D Tax Credit?
The credit is set out in Cabinet Decision No. 215 of 2025 and Ministerial Decision No. 24 of 2026. It is calculated as a percentage of your qualifying R&D expenditure and is used to reduce your Corporate Tax or Top-up Tax liability.
In Phase 1, the credit is non-refundable. That means it can reduce the tax you owe, but it is not paid out in cash. Unused credit can generally be carried forward, subject to ownership conditions.
R&D Tax Credit Rates
The rate depends on how much you spend on qualifying R&D in the tax period and how many R&D staff you have:
- 15% on qualifying spending of up to AED 1 million, with at least 2 R&D staff.
- 35% on qualifying spending above AED 1 million and up to AED 2 million, with at least 6 R&D staff.
- 50% on qualifying spending above AED 2 million and up to AED 5 million, with at least 14 R&D staff.
The maximum qualifying spending is AED 5 million per entity or tax group per tax period. If you meet the spending level for a tier but not its staff number, the lower tier applies.
Who Can Claim the Credit?
The credit is available to:
- UAE companies subject to Corporate Tax and/or Top-up Tax that carry out qualifying R&D.
- Foreign companies doing qualifying R&D through a UAE permanent establishment taxed on that income.
Qualifying Free Zone Persons can claim only if they pay Corporate Tax at 9% on the income from the R&D, or are subject to Top-up Tax. Businesses that are not subject to Corporate Tax or Top-up Tax cannot claim.
What Counts as Qualifying R&D?
An R&D activity must be carried out in the UAE and must be:
- Novel: aimed at new findings.
- Creative: based on original concepts or hypotheses.
- Uncertain: the outcome or the way to achieve it is not known in advance.
- Systematic: planned and budgeted.
- Transferable or reproducible.
Social sciences, humanities and the arts are excluded.
What Spending Counts?
- Staff costs for R&D staff based in the UAE and under your direct control. These are uplifted by 30% to cover overheads.
- Consumables used in the R&D.
- Subcontracting fees, but only if the subcontractor is based in the UAE, does the work in the UAE and does not subcontract it again. Subcontracting within your own group does not qualify.
Each R&D project must have at least AED 500,000 of qualifying spending in the period. The spending must be wholly for the R&D, deductible for Corporate Tax, and not funded by a grant or another incentive.
How to Claim the R&D Tax Credit
- Get pre-approval. Each R&D project needs pre-approval from the Emirates Research and Development Council.
- Keep detailed records. Track R&D staff, time and costs by project. Records must be kept for seven years after the end of the tax period.
- Prepare audited financial statements for the tax period.
- Claim in your tax return. Submit the claim with your Corporate Tax or Top-up Tax return, with proof of pre-approval and a declaration from senior management.
Late claims are not accepted unless the FTA agrees there were exceptional circumstances, so plan the claim before your return deadline. See our guide to Corporate Tax return filing.
Frequently Asked Questions
How much is the UAE R&D tax credit?
15%, 35% or 50% of qualifying R&D spending, depending on your spending level and R&D staff numbers, on up to AED 5 million per tax period.
Is the UAE R&D tax credit refundable?
No. In Phase 1 it is non-refundable. It reduces your Corporate Tax or Top-up Tax, and unused credit can generally be carried forward.
When does the R&D tax credit start?
It applies to tax periods starting on or after 1 January 2026.
Can free zone companies claim the R&D tax credit?
A Qualifying Free Zone Person can claim only if it pays 9% Corporate Tax on the R&D income or is subject to Top-up Tax.
Note: This article provides general information only and is not tax advice. The R&D programme has detailed conditions and may change in later phases. Confirm your position with the Ministry of Finance, the Federal Tax Authority or a qualified tax professional.