On 18 March 2026, the Ministry of Finance announced Phase 1 of the UAE Research and Development (R&D) Tax Incentives Programme. The measure is designed to encourage private-sector investment in genuine research and innovation activity.
How Phase 1 is designed
The announced credit is non-refundable and may reach up to 50% of qualifying expenditure, subject to a qualifying expenditure cap of AED 5 million. A non-refundable credit can reduce a tax liability but does not, by itself, create a cash refund when the credit exceeds the tax due. The Ministry said the first phase will help it assess uptake and the economic impact before deciding on possible future changes.
The announcement does not mean that every development, software or product expense automatically qualifies. Businesses should distinguish qualifying R&D activity from routine operations, product maintenance, commercial launch costs and other expenditure, and should wait for the applicable detailed rules before claiming a credit.
What finance teams should prepare
- Identify projects that may involve systematic research or experimental development.
- Keep project plans, technical records, employee time evidence, contracts and cost allocations together.
- Separate project costs from ordinary operating expenses in the ledger.
- Track the credit’s use against Corporate Tax payable and document any assumptions.
The Ministry indicated that a later phase may consider a refundable credit or a broader expenditure limit, but these were possibilities for future evaluation, not benefits promised under Phase 1.
Official source: Ministry of Finance announcement on the Phase 1 R&D incentive.
This summary is general information. Check the legislation and detailed guidance applicable to the relevant tax period before treating any expense as eligible.
