UAE rolls out up to 50% tax credit for businesses

Dubai: The UAE has launched the first phase of its Research and Development (R&D) Tax Incentives Programme, offering businesses tax credits to encourage investment in innovation and technology.

Under Phase 1, companies can claim a non-refundable tax credit of up to 50% on qualifying R&D expenditures, capped at Dh5 million. The initiative aims to support private-sector research while strengthening the country’s long-term economic growth strategy.

The Ministry of Finance said the program is designed to make it easier for businesses to invest in research activities, particularly as the UAE continues to position itself as a hub for advanced industries and emerging technologies.

Early-stage tax guide

The incentive comes as part of the UAE’s recently introduced corporate tax system. Authorities said the non-refundable structure reflects the early stage of the regime and is intended to be simple to administer.

Officials also noted that the design aligns with international tax developments, including the OECD’s Pillar Two framework, helping ensure predictable tax outcomes for companies operating in the UAE.

Data-driven approach

Phase 1 will also serve as a testing ground for policymakers.

The Ministry of Finance will monitor how businesses use the incentive, assess its economic impact and gather data to refine future versions of the programme.

Based on these insights, Phase 2 could include enhancements such as refundable tax credits or broader eligibility for R&D spending, either across the economy or in targeted sectors.

Attract investment

The phased rollout is part of the UAE’s wider strategy to build a competitive and transparent tax system that attracts global investment.

Authorities said the programme is expected to accelerate innovation, support business growth and contribute to the country’s economic transformation over the long term.