On 18 March 2026, the UAE launched the first phase of the ‘Research and Development (R&D) Tax Incentives Programme’, aimed at supporting innovation and driving knowledge-based economic growth.

Ministerial Decision No. 24 of 2026 (PDF, 500 KB) on the Implementation of Certain Provisions of Cabinet Decision No. 215 of 2025 on R&D Tax Credit for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses fleshes out the practical rules for Phase 1 of the UAE’s R&D Tax Incentives Programme.

Under this phase, businesses can benefit from a non-refundable tax credit of up to 50 per cent of eligible R&D expenditure, capped at AED 5 million. This incentive is designed to encourage companies to invest in innovation and advanced technologies, strengthening the country’s position as a global hub for future industries.

The programme also takes into account the developments in the global tax landscape, particularly the ‘Pillar Two’ framework issued by the Organisation for Economic Co-operation and Development (OECD). The non-refundable tax credit is expected to support more stable and transparent effective tax rates for businesses operating in the international environment.

According to Ministerial Decision No. 24 of 2026, an activity carried out in the country as part of an R&D project is considered a qualified activity if it meets all of the following conditions:

1. It is novel, in that it aims to produce new findings.
2. It is creative, involving original concepts or hypotheses.
3. It is uncertain, in that the outcome or means of achieving it are not known in advance.
4. It is systematic, following a plan and budget.
5. It is transferable or reproducible, such that its results can be applied or replicated in other

• Cabinet Decision No. 215 of 2025 on Research & Development Tax Credit
  
• OECD’s Frascati Manual guidelines