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The UAE launched Phase 1 of its Research and Development Tax Incentives Programme on March 18, 2026, effective immediately. Businesses conducting qualifying R&D activities can claim a non-refundable tax credit of up to 50% of eligible R&D expenditure, capped at AED 5,000,000 per tax year. To qualify, R&D activities must meet five conditions: novel, creative, uncertain outcome, systematic, and transferable/reproducible. Employers must document all qualifying activities and expenditures per Ministerial Decision No. 24 of 2026 and submit supporting documentation with corporate tax filings.
UAE Launches R&D Tax Credit Programme
The United Arab Emirates launched Phase 1 of its Research and Development Tax Incentives Programme on 18 March 2026, effective immediately. Businesses conducting qualifying R&D activities can claim a non-refundable tax credit of up to 50% of eligible R&D expenditure, capped at AED 5,000,000 per tax year.
Who is affected
All businesses operating in the UAE that conduct research and development activities are eligible, regardless of sector. The programme applies to any organisation undertaking qualifying R&D projects that meet the five statutory conditions outlined in Ministerial Decision No. 24 of 2026.
What's changing
The UAE has introduced a new income tax incentive structure for R&D-intensive businesses. Previously, no dedicated R&D tax credit existed in the UAE corporate tax framework. Under the new programme, eligible businesses can now offset qualifying R&D costs against their tax liability.
| Aspect | Details |
|---|---|
| Credit rate | 50% of qualifying R&D expenditure |
| Annual cap | AED 5,000,000 per tax year |
| Credit type | Non-refundable |
| Effective date | 18 March 2026 |
An activity qualifies as R&D only if it meets all five conditions: it must be novel (aiming to produce new findings), creative (involving original concepts or hypotheses), uncertain (with outcome or means of achievement not known in advance), systematic (following a documented plan and budget), and transferable or reproducible (with results applicable or replicable elsewhere).
What NEO partners and clients should do
- Document R&D activities now. Establish systems to track and document all qualifying R&D activities and expenditures in accordance with Ministerial Decision No. 24 of 2026, ensuring each activity meets all five statutory conditions.
- Segregate eligible costs. Maintain separate accounting records for R&D expenditures eligible for the credit to simplify calculation and substantiation during corporate tax filings.
- Prepare supporting documentation. Compile technical descriptions, project plans, budgets, and outcome records for all R&D projects claimed under the programme before submitting corporate tax returns.
- Review current projects. Audit existing and planned R&D initiatives to identify which activities meet the five qualifying conditions and calculate potential credit exposure for the 2026 tax year.
Sources
- Tax incentives for innovation-driven businesses — Government of the United Arab Emirates
