UAE · Corporate Tax · Phase 1 · 2026

UAE R&D Tax Credit: what every company needs to know

Phase 1 of the UAE R&D credit introduces tiered benefits of up to 50% on qualifying spend, governed by Cabinet Decision 215 of 2025 and Ministerial Decision 24 of 2026. This guide covers every material aspect, without the jargon.

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Last reviewed 11 April 2026 · Verify against Ministry of Finance and Federal Tax Authority · Not tax advice

Overview

What is the UAE R&D tax credit?

The UAE R&D tax credit is a federal Corporate Tax incentive introduced under Cabinet Decision No. 215 of 2025 and Ministerial Decision No. 24 of 2026. It allows UAE Corporate Tax-resident companies to claim a non-refundable credit against their Corporate Tax or Domestic Minimum Top-up Tax (DMTT) liability for qualifying research and development expenditure. Phase 1 applies to tax periods commencing on or after 1 January 2026.

The credit applies tiered rates of 15%, 35%, and 50% to bands of qualifying AED expenditure, with each band requiring a minimum number of UAE-based R&D staff. Qualifying activities must meet OECD Frascati Manual criteria: novel, creative, uncertain, systematic, and performed by UAE-based personnel.

One requirement sets this programme apart from its international counterparts: pre-approval from the UAE R&D Council via the Tawwer portal, obtained before qualifying expenditure is incurred. Miss this step, and no amount of excellent documentation can rescue the claim.

At a glance

Effective from1 Jan 2026

Credit typeNon-refundable (Phase 1)

Credit rates15% / 35% / 50%

Max qualifying spend~AED 5M / period

Max credit~AED 2M / entity

Pre-approvalRequired, Tawwer portal

Eligibility standardOECD Frascati Manual

Record retention7 years

From public summaries, verify with MoF and FTA.

Primary sources

Official government references

AutoDoc summarises publicly described rules to help you plan documentation. Only official sources and your qualified advisors establish legal positions.

Source	What you will find
UAE Ministry of Finance, tax legislation	Corporate tax laws, cabinet decisions, and official summaries. Entry point for Cabinet Decision No. 215 of 2025 and Ministerial Decision No. 24 of 2026.
Federal Tax Authority (FTA)	Taxable person guidance, filing channels, compliance deadlines, and corporate tax return instructions.
Cabinet Decision No. 215 of 2025	Core instrument establishing the R&D tax credit framework. Locate the official Arabic/English PDF on the MoF legislation portal.
Ministerial Decision No. 24 of 2026	Operational detail on credit mechanics, qualifying spend bands, staff thresholds, and filing requirements.
Federal Decree-Law No. 28 of 2025	Amends the UAE Corporate Tax Law to recognise tax credits from qualifying incentive schemes.

Credit structure

How the tiered credit works

Credit rates apply progressively to bands of qualifying R&D expenditure. You must satisfy both the spend threshold and the minimum UAE-based R&D headcount for each band, think of it like a tax bracket, but for R&D investment. If your headcount falls short of a higher band's requirement, that band's rate doesn't apply regardless of spend.

Qualifying R&D spend (AED)	Min. UAE R&D staff	Credit rate	Max credit on band
First 1,000,000	2	15%	AED 150,000
AED 1,000,001 – 2,000,000	6	35%	AED 350,000
AED 2,000,001 – 5,000,000	14	50%	AED 1,500,000
Programme maximum (all bands combined)			~AED 2,000,000

Figures derived from public summaries of Ministerial Decision No. 24 of 2026. Individual project minimums (commonly cited at AED 500,000 per project per period) may also apply. Always confirm exact figures against the official Arabic/English decision text.

How to claim

The four-step process, and why order matters

Unlike Canada's SR&ED or the US §41 credit, which are claimed retrospectively through a tax return, the UAE programme requires you to act before you spend. Pre-approval is not optional. It must be obtained before qualifying expenditure is incurred, or the credit is at risk regardless of how well-documented the underlying science is.

Map your activities against Frascati criteria

Before anything else, your technical and finance teams need to agree on which projects genuinely qualify. This is an engineering-led assessment of whether the work is novel, creative, technically uncertain, systematic, and aimed at generating transferable knowledge. AutoDoc helps automate this mapping from your existing engineering tools.

Apply to the R&D Council via Tawwer, before work starts

Submit your project application to the UAE R&D Council through the Tawwer government portal before qualifying expenditure is incurred. Approval is project-specific and must be renewed for each tax period of continuation. This is the step that most international companies miss because it has no equivalent in the programmes they know.

Deep dive: R&D Council pre-approval and the Tawwer portal

Capture contemporaneous technical and financial evidence

Document throughout the tax period, not retrospectively at year-end. Technical records (commits, tickets, experiment logs, test results, design documents), financial records (timesheets, cost allocations, invoices), and staff records (UAE-based status, employment relationship, time allocation per project) all form the audit file. The quality of this evidence is what separates a successful claim from a disallowed one.

How to build Frascati-aligned technical records

File the credit with your UAE Corporate Tax return

The credit is claimed through the UAE Corporate Tax filing with the Federal Tax Authority. In Phase 1, it is non-refundable, it offsets CT or DMTT liability, with any excess potentially carried forward subject to conditions. Work with a qualified UAE tax advisor on the filing mechanics and supporting claim pack.

Eligibility standard

The Frascati Manual, explained plainly

The OECD Frascati Manual is the international benchmark for defining research and development. Published by the Organisation for Economic Co-operation and Development, it is the standard behind SR&ED in Canada, the §41 credit in the United States, and now the UAE R&D credit. Its purpose is to draw a clear line between two types of activity: advancing the state of knowledge versus applying what is already known.

For UAE purposes, a project must satisfy five criteria simultaneously. These are not bureaucratic checkboxes, they reflect a genuine philosophical distinction that separates R&D from ordinary business activity. Understanding them is the foundation of every successful claim.

Novel

Aimed at new knowledge, not the replication of known results.

Your project must push beyond the current state of the art in its field. Copying a well-documented architecture from a textbook, even if it is complex to implement, is not novel. Designing a fundamentally new approach to a problem where no established solution exists is. The test is relative to what a competent practitioner in your discipline already knows.

Creative

Based on original concepts or hypotheses, not routine application of existing techniques.

There must be genuine intellectual invention. A development team applying a known ML model to a new dataset is not inherently creative in the Frascati sense. Inventing a new architecture to overcome a fundamental limitation of existing models is. The question is whether your team devised something original, or executed something that any competent professional would have done the same way.

Uncertain

The outcome or the method to achieve it was genuinely uncertain at the outset.

Technical uncertainty is the cornerstone test. If a competent engineer in your field could solve the problem using available knowledge, without experimentation, it likely fails this criterion. Document explicitly what was unknown at the start of each project, what hypotheses you held, and how the investigation resolved those uncertainties. Failed experiments matter as much as successes, they are often the clearest evidence that genuine uncertainty existed.

Systematic

Conducted according to a defined methodology, planned, hypothesis-driven, and documented.

Ad-hoc experimentation does not qualify. Your team's work needs to follow a structured process: defining a hypothesis, designing experiments, measuring results, and iterating on the basis of what you learn. Jira tickets, GitHub commits, sprint retrospectives, and design documents all become your evidence base, but only if they collectively tell a coherent story of systematic investigation rather than informal tinkering.

Transferable

Results produce new knowledge or insights that can in principle be communicated and reproduced.

The knowledge generated must be transferable, even if proprietary. This means your documentation needs to capture not just what you built, but what you learned: what worked, what failed, why, and what that reveals about the underlying science or technology. That narrative, the structured account of inquiry and discovery, is the heart of a compliant R&D file, and the thing AutoDoc is built to help you produce.

Your documentation is your eligibility proof

Every commit, ticket, experiment log, and design decision creates, or destroys, the evidence needed to satisfy these five criteria. AutoDoc connects to your engineering stack to capture and structure this automatically, producing Frascati-aligned narratives your advisors can use directly.

Eligibility examples

What qualifies, and what doesn't

The boundary between qualifying R&D and ordinary commercial activity is where most disputes arise. These examples illustrate how the Frascati criteria translate into common business scenarios, they are not definitive rulings, but they reflect the standard interpretation applied by tax authorities internationally.

Likely qualifies

Novel ML model architecture overcoming fundamental accuracy limitations

Drug compound synthesis with uncertain biological outcomes

New real-time data compression algorithm with unknown performance envelope

Proprietary materials formulation for extreme-temperature manufacturing

New protocol for autonomous vehicle sensor fusion at the edge

First-of-kind infrastructure for edge computing in UAE climate conditions

Typically excluded

Routine software development using established frameworks

Bug fixes, UI/UX improvements, or cosmetic product updates

Market research, user surveys, or A/B testing for commercial purposes

Standard quality assurance or testing of known processes

Adapting existing tools to a new dataset without fundamental innovation

Administrative, financial, or commercial activities without technical uncertainty

Quick estimate

How much could your company recover?

Enter your approximate R&D spend and qualifying headcount for an illustrative credit range based on the Phase 1 tier structure. This is directional guidance only, actual amounts depend on your qualifying expenditure, Frascati alignment, pre-approval status, and advisor review.

Snapshot credit estimate

Enter rough qualifying R&D spend (AED) and average R&D headcount. Illustrative only. Not tax advice.

Open full calculator

Qualifying spend (AED)

Average R&D staff

Illustrative total credit (AED)

430,000

First AED 1M 15%150,000
AED 1M to 2M 35%280,000
AED 2M to 5M 35%0

Open the full credit calculator Not sure you qualify? Run the eligibility screener

Hypothetical scenarios

How UAE rules meet real work

Cabinet and ministerial decisions describe progressive rates on bands of qualifying spend, tied to minimum average R&D staff in each band, plus R&D Council pre-approval and Frascati-style project tests. On paper that is a table. In practice, finance and engineering leaders need the same story told with numbers, headcount, and evidence in one place.

The three walkthroughs below are illustrative fiction. They do not decide eligibility or filing outcomes. They show how spend volume, where it falls in each million-dirham band, and what you can prove tend to move together. For legal text and MoF citations, start with our 2026 UAE guide.

All names, amounts, and outcomes are fictional. Not tax or legal advice.

How to read each example

01
Situation
Who the company is and what spend and staff look like for one tax year (illustrative).
02
Mechanics snapshot
A compact figure: where spend sits in the bands and how staff thresholds interact. Your advisor applies the official table.
03
Proof and takeaway
What still has to be true in real life, and what executives should expect reviewers to ask about.

Scenario A

Small software team in Dubai

Why start with software. Product teams often concentrate spend in salaries, cloud, and contractors. Many Free Zone companies first ask whether their entire engineering budget "counts" before they separate experimental work from roadmaps and maintenance. This scenario keeps the math small so you can see the first band without noise from multi-million dirham stacks.

Imagine "DevHub FZ," about twenty-five people. In one tax year its advisors treat roughly AED 900,000 as qualifying R&D spend. On average, three full-time engineers work on directed R&D in the UAE. Those facts matter together: spend size tells you which band you are in; headcount tells you whether public summaries of minimum average R&D staff for that band are even in play.

Public explanations of Phase 1 often describe a first slice of up to AED 1 million of qualifying expenditure with a 15% credit rate, provided the entity meets a floor such as at least two average R&D staff for that band. Here, spend sits inside that first million, and three staff clears the usual floor in that story. A back-of-envelope illustrative discussion might mention 15% of 900,000, but only if Council approval, project rules, and caps are satisfied. Your firm applies the real decision text.

What still has to be true outside the spreadsheet

R&D Council pre-approval for the project for the year, where required.
Work that passes Frascati-style tests (novel, uncertain, systematic), not routine product upkeep relabeled as R&D.
Records that tie payroll and costs to experiments: tickets, repos, test logs, and finance allocation, not a narrative written only at year end.

Takeaway

Meeting a band and a staff floor on paper is only the start. What survives review is dated engineering and cost evidence your tax partner can trace end to end.

When total qualifying spend crosses more than one million dirhams, you stop thinking about a single bar and start stacking slices. The next scenario shows why headcount and spend move together, especially on the highest band.

Scenario B

Factory trials in the Northern Emirates

Why manufacturing reads differently. Furnace trials, coating batches, and QC runs spread spend across materials, utilities, and specialist labour. The same banded credit idea applies, but proof shifts from pull requests to batch IDs, settings, and measured outcomes. Expect questions about whether each trial was a planned experiment, not routine production tuning.

"CoatWell Industries" runs forty furnace trials to stabilize a new protective coating. In one tax year, qualifying R&D spend totals AED 2.2 million. Average UAE-based R&D staff for the year is eight. Conceptually, slice spend into the first million dirhams, the next million up to two million, and the remainder above two million (here, two hundred thousand). Public summaries often attach different credit rates and different minimum average staff thresholds to each slice.

Eight staff may be enough for the first two slices in many tellings, but the highest band is frequently described as needing roughly fourteen average R&D staff. If the company only has eight, the law may not grant the top rate on that last slice. That is the point of this scenario: headcount and spend move together, and the weakest slice is not always the smallest number on the chart.

What strong proof looks like on the ground

For each batch: date, furnace settings, outcome, and why the next batch changed. Marketing photos are optional; structured trial records (batch IDs, QC readings, sign-off by shift) are what make the story auditable.

Takeaway

Large spend with messy trial history is hard to defend. Modest spend with disciplined batch logs is often easier for advisors to support in review.

Credit mechanics are only half of the file. The other half is whether activities count as qualifying R&D under Frascati-style tests. The last scenario contrasts a routine implementation with work where uncertainty is real and documented.

Scenario C

Routine IT upgrade versus real R&D uncertainty

Why this sits beside UAE mechanics. Teams can have perfect spend tracking and still fail the project test if the work is implementation of known methods rather than systematic investigation toward an uncertain outcome. Tax and R&D leaders often negotiate this line with engineering so the same facts show up in technical and financial records.

Compare two projects at the same company. Project 1 is a payroll cutover to a well-known product using the vendor playbook: timelines are predictable, and issues are usually configuration or training. That profile is often treated as routine implementation, not experimental R&D, unless the facts are unusual. Project 2 is a new inference pipeline where you must discover which architecture meets accuracy and latency under your data and your production load. You try, measure, fail, and change approach. That is closer to documented technical uncertainty.

UAE guidance points to Frascati-style questions. Reviewers look for evidence that you did not know the answer in advance, that you proceeded in a systematic way, and that you can show what failed, what worked, and what you learned. Software teams often already have the raw material in Jira, Git, and Confluence; the gap is usually continuity and dates, not more slide decks.

Contrasting projects (illustrative)

The two panels below are a side-by-side contrast, not a legal determination for either project type.

Often routinePayroll cutover

Known product, documented implementation path, predictable classes of issues. Success looks like go-live and training, not a publishable experimental result.

InvestigationNew inference pipeline

You must discover what works under your constraints. Hypotheses, measurements, failed attempts, and design changes belong in one traceable story.

Questions a Frascati-style file must answer

What was unknown at the start?
The gap between textbook method and your specific environment.
What did you try, in order?
Dated experiments, not a single end-of-year summary.
What failed and what did you learn?
Evidence of iteration, not only success screenshots.

Takeaway

Labels on a roadmap do not replace contemporaneous build and test history. AutoDoc links Jira, Git, and Confluence so advisors see one timeline; it does not decide eligibility.

Multi-jurisdiction documentation

AutoDoc for UAE

Tools built for this credit

We have built a suite of resources to help UAE companies think through eligibility, estimate potential credits, and get expert-level answers, all grounded in the official guidance.

Credit Calculator

Bottom-up estimation from your actual team roles, salaries, and expense categories. Multi-year projections with Emirate and industry context.

Calculate my credit

Eligibility Screener

Frascati-aligned questions that give your projects a directional readiness signal in under five minutes.

Screen my projects

AI R&D Assistant

Ask any question about UAE R&D credits, eligibility, Tawwer pre-approval, documentation standards, and how it compares to SR&ED.

Ask a question

Compliance

Documentation checklist

UAE R&D claims live or die on the quality of contemporaneous documentation. These obligations should be built into your engineering and finance workflows from day one of the tax period, not assembled at year-end when memories are cold and evidence is incomplete.

Map each project to Frascati hypotheses

Document the scientific or technological question, why outcomes were uncertain at the outset, and how you designed experiments to resolve them.

Obtain R&D Council pre-approval via Tawwer

Submit before qualifying expenditure is incurred. Track approval status per project and per period, renewal is required annually.

Capture contemporaneous technical evidence

Commits, tickets, sprint notes, experiment logs, design docs, and test results. AutoDoc connects to your engineering stack to capture and structure this continuously.

Tag and document qualifying costs

Staff costs, consumables, and eligible subcontractor costs must be separated and attributed to specific approved projects throughout the period.

Maintain staff records

Timesheets or equivalent records showing each R&D staff member's UAE-based status, role, and time allocation to each qualifying project.

Retain everything for 7 years

Technical files, financial records, staff documentation, Tawwer approval records, and Corporate Tax filings, from the end of the relevant tax period.

Go deeper

In-depth guides

Flagship guide

Cabinet 215 and Ministerial Decision 24 explained

A thorough walkthrough of the legislative framework, with SR&ED and US parallels.

Read guide Pre-approval

R&D Council pre-approval and the Tawwer portal

Step-by-step on what to submit, when, and what happens if you miss the deadline.

Read guide Documentation

Building Frascati-aligned technical records

How to structure your engineering evidence to satisfy the five Frascati criteria.

Read guide Comparison

UAE vs SR&ED vs US R&D: documentation differences

Three regimes, one team. How to document for multiple jurisdictions efficiently.

Read guide Pillar Two

UAE R&D credit and DMTT, the Pillar Two angle

How the R&D credit interacts with Domestic Minimum Top-up Tax for large groups.

Read guide Industries

Software and manufacturing evidence patterns

Sector-specific documentation frameworks for tech and manufacturing R&D teams.

Read guide

Common questions

UAE R&D tax credit, FAQ

Educational answers grounded in publicly available UAE Ministry of Finance and Federal Tax Authority guidance. Not tax advice, confirm all positions with a qualified UAE tax professional.

What is the UAE R&D tax credit?

The UAE R&D tax credit is a Corporate Tax incentive introduced under Cabinet Decision No. 215 of 2025 and Ministerial Decision No. 24 of 2026, linked to Federal Decree-Law No. 28 of 2025 (UAE Corporate Tax Law). It allows UAE Corporate Tax-resident entities to claim a non-refundable credit against their Corporate Tax or Domestic Minimum Top-up Tax (DMTT) liability for qualifying research and development expenditure. Phase 1 applies to tax periods commencing on or after 1 January 2026.

What are the UAE R&D credit rates and how much can I claim?

Three tiered rates apply to qualifying R&D expenditure per tax period: 15% on the first AED 1 million (minimum 2 qualifying R&D staff), 35% on spend from AED 1M to AED 2M (minimum 6 staff), and 50% on spend from AED 2M up to a cap of AED 5M (minimum 14 staff). The maximum credit is commonly cited at around AED 2 million per entity or tax group per period.

How do I claim the UAE R&D tax credit?

To claim: (1) Confirm your R&D activities meet OECD Frascati-style criteria (novel, uncertain, systematic, and UAE-based). (2) Obtain pre-approval from the UAE R&D Council via the Tawwer portal for each project before work commences. (3) Maintain contemporaneous technical and financial records throughout. (4) File your UAE Corporate Tax return and claim the credit with the Federal Tax Authority.

Does software development qualify for the UAE R&D credit?

Software R&D can qualify if it aims to resolve genuine technological uncertainty: for example, building a novel algorithm, developing new AI model architectures, or creating systems that require non-trivial technical investigation with uncertain outcomes. Routine development using known frameworks, bug fixes, UI/UX improvements, or standard software implementation does not qualify.

Can Dubai, Abu Dhabi, or Free Zone companies claim the UAE R&D credit?

The UAE R&D credit is a federal Corporate Tax incentive applicable across all emirates. Free Zone entities (QFZPs) should confirm their specific eligibility, particularly how claiming the credit interacts with their QFZP status, with qualified UAE tax advisors.

Is the UAE Phase 1 R&D credit refundable?

Phase 1 is non-refundable: it offsets UAE Corporate Tax and/or DMTT/Top-up Tax liability, with any unused excess potentially carried forward to future periods subject to conditions. It is not paid out as a cash refund.

What is the UAE R&D Council and the Tawwer portal?

The UAE R&D Council is the authority responsible for pre-approving R&D projects for Corporate Tax credit purposes. The Tawwer portal is the online government platform for submitting project applications. Each project requires pre-approval before work commences, and approval must be renewed for each tax period.

What does Frascati mean for my R&D team?

The OECD Frascati Manual defines R&D as systematic work aimed at increasing knowledge and using it to devise new applications. Qualifying work must be: Novel, Creative, Uncertain (at the outset), Systematic (planned and documented), and producing Transferable knowledge. Your engineering records (commit history, tickets, test logs, lab notes) are the raw material for building this evidence.

How long must UAE R&D records be kept?

Seven years of technical and financial records from the end of the tax period. Records should include project plans, technical evidence, staff records, and financial documentation supporting each qualifying cost.

How is the UAE R&D credit different from Canada's SR&ED or the US R&D credit?

All three use Frascati-style eligibility criteria. Key differences: UAE requires mandatory R&D Council pre-approval per project before spend; SR&ED and the US credit do not. UAE uses tiered rates (15%/35%/50%) linked to staff headcount; SR&ED uses an enhanced deduction model with refundable amounts for small companies; the US credit uses an incremental base calculation.

What types of activities are excluded from the UAE R&D credit?

Excluded activities include: social sciences, humanities, and arts research; market research; routine or standard testing and quality control; administrative or commercial activities without technological advancement; and R&D performed outside the UAE or by non-UAE-based staff.

Does AutoDoc provide tax or legal advice?

No. AutoDoc provides software and educational content to help engineering and finance teams document R&D contemporaneously and export structured narratives for their advisors. All final eligibility determinations and tax positions must be made by qualified UAE tax and legal professionals.

Have a more specific question?

Our UAE R&D AI assistant covers hundreds of questions about eligibility, pre-approval, documentation, and credit mechanics, grounded in official guidance.

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Your documentation is the claim

AutoDoc connects to Jira, GitHub, Confluence, Notion, and other engineering tools, producing structured Frascati-aligned narratives your advisors can take directly to the R&D Council and the FTA.

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Disclaimer: This page contains general information only, not legal, tax, or accounting advice. Laws and decisions change; all figures cited are from public summaries and may not reflect the most current official text. Confirm your position with qualified UAE tax and legal professionals and with official UAE Ministry of Finance and Federal Tax Authority publications.