Tax incentives for innovation-driven businesses
To encourage R&D activities, foster innovation and economic growth within the UAE, a Research and Development (R&D) tax incentive is being considered. Based on feedback received during public consultations conducted in April 2024, the proposed incentive is expected to take effect for tax periods starting on or after 1 January 2026.
The R&D tax incentive will be expenditure-based, offering a potential 30-50 per cent tax credit and will be refundable depending on the revenue and number of employees of the business in the UAE. The scope of qualifying R&D activities will be aligned to the OECD’s Frascati Manual guidelines and will be required to be conducted within the UAE.
Another incentive being considered is a refundable tax credit for high-value employment activities. This aims to encourage businesses to engage in activities that deliver significant economic benefits, stimulate innovation, and enhance the UAE’s global competitiveness.
This incentive is proposed to take effect on 1 January 2025 and will be granted as a percentage of eligible salary costs for employees engaged in high-value employment activities. This includes C-suite executives and other senior personnel performing core business functions that add substantial value to the UAE economy.
The final form and implementation of the above-mentioned proposed incentives, are subject to legislative approvals. The Ministry of Finance will provide further details and guidance for taxpayers regarding these incentives in due course.
Source: WAM
Updated on:
23 Oct 2025
