Innovation Pays: The Game-Changing UAE R&D Tax Incentive (Ministerial Decision 24/2026)
The UAE has taken a major step toward strengthening its innovation ecosystem with the introduction of the UAE R&D tax incentive.
The UAE has issued the Regulations (Ministerial Decision No. 24 of 2026 & Cabinet Decision No. 215 of 2025) to define qualifying research and development activities, prescribe eligible expenditure categories, and establish the conditions, thresholds, and compliance requirements for accessing the UAE corporate tax R&D incentive, effective for tax periods starting on or after 1 January 2026.
How Is R&D Spend Translated into Progressive Tax Benefits in the UAE?
The UAE corporate tax R&D deduction operates through a tiered credit system based on qualifying R&D expenditure UAE and workforce thresholds:
| TIER |
QUALIFYING EXPENDITURE (AED) |
CREDIT RATE |
MIN. R&D STAFF |
| Tier 1 |
Up to AED 1,000,000 |
15% |
2 staff |
| Tier 2 |
AED 1,000,001 – AED 2,000,000 |
35% |
6 staff |
| Tier 3 |
AED 2,000,001 – AED 5,000,000 |
50% |
14 staff |
What Qualifies as R&D?
Cost incurred while conducting Qualifying R&D Activity in the UAE that meets all the following criteria qualifies for R&D Credit:
- Novel: Aims to generate new knowledge or findings.
- Creative: Involves original ideas, concepts, or hypotheses.
- Uncertain: The results or methods are not known beforehand.
- Systematic: Conducted according to a defined plan and budget.
- Transferable/Reproducible: The results can be applied or replicated in other situations
Eligible Costs:
Eligible costs for the purposes of the UAE R&D tax incentive include the following:
- Staff costs: Salaries, bonuses, allowances, and training for UAE-based R&D employees, with a 30% uplift for overheads
- Consumables: Materials, license fees, and clinical trial costs directly linked to R&D
- Subcontracting: Limited to UAE-based service providers
How do you claim R&D Incentive?
If a company wants to claim the UAE R&D Tax Credit, it must first get approval from the R&D Council for the project. After approval, the Council may ask to submit progress reports and technical documents.
Utilisation, transfer and carry forward of credit can be taken place subject to fulfilment of continuity conditions
To safeguard the regime, anti-abuse provisions allow authorities to claw back credits in cases of artificial arrangements, cessation of business, relocation, or misuse within five years.
How does this decision benefit the business?
Whether the business is a local SME launching its first R&D programme or a multinational establishing a regional innovation hub, the framework enables companies to:
- Lower Tax Costs on Innovation
- Predictable, Globally Aligned Rules Attract Foreign Investment
- Greater Flexibility Improves Business Planning and Growth
- Strengthens Long-Term Business Sustainability
- Supportive Compliance Framework Strengthens Business Credibility
How Can CLA Emirates Support Businesses in Unlocking and Sustaining UAE R&D Tax Benefits?
At CLA Emirates, we help businesses unlock the full value of the UAE R&D Tax Incentive by providing:
- Eligibility Assessments – Evaluating your projects and activities to determine qualification under UAE R&D criteria.
- R&D Operating Model Structuring – Designing optimal UAE-based R&D setups tailored to your business and compliance needs.
- Robust Documentation Frameworks – Building audit-ready technical and financial documentation to support your R&D claims.
- Seamless Integration with Corporate Tax – Aligning R&D tax credit claims with corporate tax computations and filings.
- End-to-End Compliance Management – Handling the entire R&D tax credit process from pre-approval to submission and ongoing updates.
If you have any further queries, please contact
CA Purvi Mehta | Associate Director - Direct Tax
M: +97152 280 0480
E: Purvi.Mehta@CLAemirates.com
