UAE starts first phase of research and development tax incentives programme

Abu Dhabi: The United Arab Emirates has started Phase 1 of a new Research and Development (R&D) Tax Incentives Programme. The goal is to support innovation and help the economy grow in the future.

The new programme gives companies a tax credit for research and development spending. Businesses can receive up to 50 percent back on eligible expenses. The support applies to spending of up to AED5 million.

The government wants companies to invest more in new ideas and technology. This step also supports the UAE’s plan to become a global center for advanced industries and modern technology.

Officials designed the programme after studying global tax rules under the OECD Pillar Two framework. In today’s tax system, a non-refundable tax credit can give companies a clearer and more stable tax result when they operate in the UAE.

The programme also matches the early stage of the UAE’s corporate tax system. The country introduced corporate tax recently. For this reason, the government created a simple system that companies can easily use.

The Ministry of Finance will study the results during Phase 1. Officials will review how companies use the incentive. They will also collect data to understand its impact on investment and innovation.

The government will use these findings to design Phase 2 of the programme. In the next stage, the ministry may improve the plan. Possible changes include a refundable tax credit or higher spending limits. Officials may also expand support to key industries.

The government will announce more details about Phase 2 later.

The UAE says this step will strengthen its tax system. The plan aims to support innovation, attract investment, and boost long-term economic growth.