The UAE introduces non-refundable R&D tax credit to boost innovation and private-sector investment.
The UAE has launched Phase 1 of its Research and Development (R&D) Tax Incentives Programme, aimed at strengthening the country’s innovation ecosystem and supporting sustainable economic growth.
Under the initial phase, businesses can claim a non-refundable R&D tax credit of up to 50% on qualifying expenditure of up to AED 5 million. The measure is intended to encourage private-sector investment in research and innovation while supporting the UAE’s goal of becoming a global hub for advanced industries and emerging technologies.
The incentive has been designed in line with recent OECD Pillar Two developments. In the current international tax environment, a non-refundable credit is expected to provide a more favourable and predictable effective tax rate for companies operating in the UAE. The approach also reflects the early stage of the UAE’s Corporate Tax regime, ensuring immediate and meaningful support for businesses undertaking genuine R&D activities.
Insights from Phase 1 will inform Phase 2 of the programme, during which the Ministry of Finance will consider potential enhancements, including a refundable credit and/or broader qualifying expenditure across the economy or within priority sectors. Further details on Phase 2 will be announced later.
This announcement was made on 18 March 2026.
