Frequently asked questions

The UAE R&D tax credit is a tiered, non-refundable tax credit established by Cabinet Decision No. 215 of 2025 and operationalised by Ministerial Decision No. 24 of 2026. It applies to tax periods beginning on or after 1 January 2026. Credit rates are 15% on the first AED 1 million of qualifying R&D expenditure, 35% on the next AED 1 million, and 50% on the following AED 3 million. The maximum credit per qualifying activity is AED 2 million. Credits offset Corporate Tax and/or Top-up Tax liability. Unused credits carry forward indefinitely.

UAE-incorporated entities subject to Corporate Tax and/or Top-up Tax that conduct qualifying R&D activities in the UAE. This includes Free Zone entities taxed at 9% on R&D-derived income or subject to Top-up Tax. Foreign entities with a UAE Permanent Establishment also qualify, provided the R&D activities relate to the PE's operations. Entities using Small Business Relief under Article 21 are explicitly excluded, as are Qualifying Free Zone Persons taxed at 0% on qualifying income. There is also a minimum R&D staff requirement that gates the rate tiers.

Yes, but only if the Free Zone entity is subject to Corporate Tax at 9% on taxable income derived from R&D activities, or is subject to Top-up Tax. A Qualifying Free Zone Person (QFZP) taxed at 0% on its qualifying income cannot claim the R&D credit. The policy logic is that the credit offsets tax, so entities outside the tax net have no tax to offset. If a Free Zone entity has some income at 9% (non-qualifying income), the credit can offset that portion.

Ministerial Decision No. 24 of 2026 adopts the OECD Frascati Manual definition. A qualifying R&D activity must meet all five Frascati criteria: novelty (aims at new knowledge, products, or processes), creativity (non-routine, original concepts), uncertainty (outcome cannot be predicted in advance), systematic investigation (planned and documented), and transferability or reproducibility (results could be reproduced by another competent team). Social sciences, humanities, and arts are explicitly excluded under MD 24 Article 3.4.

Yes, but only where they involve genuine technical uncertainty that cannot be resolved by a competent professional using standard methods. Building a commercial application using existing frameworks is typically not R&D. Developing a novel algorithm, a new data structure, a performance improvement that required experimental investigation, or a system that integrates technologies in a way that has not been done before can qualify. The test is not whether the software is new to the entity, but whether it required research and experimental development to create.

Yes. Failed R&D projects are eligible, and negative results are valuable evidence of genuine research. The Frascati framework explicitly recognises that not all R&D succeeds. If a project was designed to resolve technical uncertainty and the outcome was that the approach did not work, the expenditure on that investigation is still qualifying R&D expenditure. The key is that the work must have been a systematic investigation at the time it was conducted, not a retroactively relabelled failure.

Three tiers under Ministerial Decision No. 24 Article 2.4: 15% on the first AED 1 million of qualifying expenditure, 35% on AED 1 million to 2 million, and 50% on AED 2 million to 5 million. Rates are marginal, which means a company with AED 3 million of qualifying spend earns 15% on the first AED 1M, 35% on the next AED 1M, and 50% on the final AED 1M. The maximum qualifying expenditure per qualifying activity is AED 5 million. The maximum credit per activity is AED 2 million.

Tier 1 (15%) requires at least 2 R&D staff. Tier 2 (35%) requires at least 6. Tier 3 (50%) requires at least 14. The specific measurement methodology (for example, point-in-time versus an average across the tax period) should be confirmed against the Council's published guidance. A common and defensible approach, which our platform uses, is to compute an average monthly FTE across the period. R&D staff must be UAE-based, under the entity's supervision, and actively engaged in qualifying R&D activities. See our blog post on the 2, 6, 14 rule for the full calculation walkthrough.

Ministerial Decision No. 24 Article 8.3 provides a 30% uplift on qualifying staff costs before the credit rate is applied. For example, if your qualifying R&D staff costs are AED 800,000, the uplift adds AED 240,000, bringing the staff cost base to AED 1,040,000 before the tiered rates are calculated. The uplift is a proxy for overhead costs (facilities, utilities, administrative support) that are otherwise not directly claimable. It applies regardless of which rate tier you reach.

No. Ministerial Decision No. 24 Article 8.5 explicitly excludes stock options and equity-linked compensation from qualifying staff costs. This includes stock option vesting, restricted stock units, cash-settled equity instruments, and equity-linked bonuses. Base salary, cash bonuses, benefits in kind (medical, pension, gratuity), and allowances are included. For equity-heavy startups, this exclusion can be material and should be factored into your staff cost calculation.

Yes. Cabinet Decision No. 215 Article 5.3.b requires a minimum of AED 500,000 in qualifying expenditure per R&D project per year. This is assessed before the 30% staff cost uplift. Projects below the threshold do not qualify for the credit. The minimum is a substance test designed to focus the incentive on substantial R&D activities rather than small experimental spending.

No. Phase 1 of the UAE R&D tax credit is non-refundable under Ministerial Decision No. 24 Article 2.2. It can only be used to offset Corporate Tax liability first, and then Top-up Tax liability. If your credit exceeds your tax liability in a given year, the unused portion carries forward, subject to the ownership continuity rules in Article 5. Refundability may be introduced in a future phase, as the Cabinet Decision framework allows the Minister to toggle between refundable and non-refundable. No such decision has been announced.

There are two steps. First, obtain pre-approval from the Emirates R&D Council for each R&D project you intend to claim. Without Council pre-approval, the Federal Tax Authority will not allow the credit. Second, file the credit as part of your Corporate Tax return, using the Council pre-approval reference and attaching the required supporting documentation (senior management declaration, qualifying expenditure breakdown, reconciliation to audited financial statements, evidence of R&D activity). See our step-by-step guide for the full process.

The Emirates R&D Council is the designated body for pre-approval of UAE R&D projects. Its role is to pre-approve that projects actually qualify as R&D under the Frascati framework. The Council reviews a structured application containing project narratives, competent professional dossiers, and supporting documents. Without Council pre-approval (CD 215 Article 3.1.b), no credit can be claimed. The Council is the gatekeeper for the technical eligibility question, while the FTA handles the financial and filing questions.

Plan for a meaningful review period of several weeks, not days. The Council's procedures were only recently established under Cabinet Decision 215 of 2025 and Ministerial Decision 24 of 2026, so published turnaround statistics are limited. A typical review will include a completeness check, a substantive technical review of each project against the Frascati criteria, and the possibility of information requests before a final decision. Companies with multiple projects or novel research domains should plan for the longer end. Do not leave the application to the last month before your Corporate Tax filing deadline.

Under Cabinet Decision No. 215 Article 9.1, each R&D project must have a named competent professional who attests to the R&D nature of the work. The competent professional is typically the technical lead, senior engineer, research scientist, or head of the team that executed the project. They should have demonstrable technical qualifications and experience in the field of the project, and should be willing to sign a formal attestation. A person in an administrative, sales, or non-technical role is unlikely to be a credible signatory. Specific Council expectations on qualifications should be confirmed against the Council's published guidance.

Cabinet Decision No. 215 Article 9.1.b requires a senior management declaration, signed under personal liability, attesting that all information in the claim is true and complete, the expenditure qualifies under the legislation, records have been maintained, no double-dipping has occurred, and ownership continuity requirements are met (if relevant). The declaration is typically signed by a director or CEO of the entity. The personal liability is real, so whoever signs should be walked through the specific attestations being made.

Seven years from the end of the tax period in which the claim is made, per Ministerial Decision No. 24 Article 12.1. The Federal Tax Authority can audit any claim within that window. Records include the full submission pack, supporting evidence, staff register, Council pre-approval documents, financial statements, and any correspondence. Records must be available for inspection on request. Deleting any part of the record within the retention period exposes the claim to challenge.

The FTA can request the full submission pack, ask specific questions about individual project narratives, verify cost lines against the General Ledger, examine the staff register, review reconciliation of the claim to audited financial statements, and examine any supporting evidence. A well-prepared claim with traceable documentation is easier to defend. A poorly prepared claim with gaps can be challenged for longer and may result in clawback of the credit plus penalties under applicable tax law.

Ministerial Decision No. 24 Article 16.2 creates a five-year lookback on specific events that trigger clawback of the credit. The listed trigger events are: ceasing to be a Taxable Person, becoming a Qualifying Free Zone Person, electing Small Business Relief, liquidation, and redomicile outside the UAE. If any trigger event occurs within five years from the end of the Tax Period or Fiscal Year in which the credit was last claimed, the credit may be clawed back in whole or in part. Because the lookback runs from the end of the claim period, the seven-year record retention must be maintained throughout.

Yes. Beyond the five-year anti-abuse triggers, the credit can be clawed back if an audit finds that claimed expenditure did not actually qualify, that the Council pre-approval was obtained on incomplete information, that the senior management declaration was incorrect, or that the entity failed to maintain the required records. The clawback mechanism is designed to protect the integrity of the incentive, and the FTA has broad discretion to apply it.

For entities that are members of a UAE Tax Group, the staff thresholds and qualifying expenditure are measured at the Tax Group level under Ministerial Decision No. 24 Article 2.3. If a parent has 8 R&D staff and a subsidiary has 10, the aggregated Tax Group has 18 and qualifies for Tier 3. Intra-group recharges are excluded under Articles 8.11, 9.5, and 10.3 to prevent double-counting. Joint and several liability applies under Article 13.7, meaning each Tax Group member is liable for the full group credit, not a proportional share.

Yes. Under Ministerial Decision No. 24 Article 6, R&D tax credits can be transferred between entities that share 75% or more common ownership. The transferee must use the credit in the Tax Period in which it is transferred, cannot carry it forward, and cannot re-transfer it. Ownership continuity and arm's length pricing conditions apply. Transfers are typically used in group structures to align credits with taxable income.

Carry-forward of unused credits requires at least 50% ownership continuity between the period credits were earned and the period they are utilised, per Ministerial Decision No. 24 Article 5.1.a. Listed companies on a recognised stock exchange are exempt from this test under Article 5.2. If ownership drops below 50%, the 'same or similar business' test under Article 5.1.b may still allow carry-forward, but it requires evidence that the entity continues the same underlying activity. Ownership changes that trigger the anti-abuse provisions in Article 16 can also lead to clawback.

No, not for the portion funded by grants or other incentives. The UAE R&D tax credit regime prohibits double-dipping, meaning expenditure already covered by a government grant, research subsidy, or other tax incentive cannot also be claimed as R&D tax credit. If a project is partially grant-funded, the qualifying expenditure is reduced by the grant amount. You must maintain a grant register documenting all grants and their coverage to demonstrate the double-dipping exclusion at audit.

Yes. Ministerial Decision No. 24 Article 10 places restrictions on subcontracted R&D, including requirements that the subcontractor be a UAE tax resident, that activities be performed in the UAE, that back-to-back subcontracting is prohibited, and that related-party subcontracting requires audited financial statements of the related party. Companies with heavy subcontracting should review Article 10 carefully and factor these rules into their claim planning. A specialised platform or tax advisor can confirm exactly how the restrictions apply to your specific arrangements.

Incentive.ae is software with tax expert review built in, not a pure consultancy. The platform automatically classifies GL lines, computes the tiered credit, generates Frascati narratives, assembles the ERDC application, manages the competent professional dossier, reconciles to financial statements, and prepares the FTA submission pack. A qualified UAE tax expert reviews every claim end-to-end and signs off before anything is filed. The combination is faster than a pure consultancy, cheaper at scale, and more defensible because every number on the claim is traceable back to its source.

It means every figure on your final claim is linked to its underlying source. Click a project's credit amount and see the exact GL lines that contributed to it. Click a staff cost and see the employee register entries. Click a project narrative and see the ERDC application and the approved competent professional dossier. Click any qualifying cost and see the specific Cabinet Decision or Ministerial Decision article that authorises it. When the FTA asks 'prove it' during an audit, you can answer in the meeting, not a week later.

Either. You can integrate directly with your accounting software, payroll system, HRIS, GitHub, Jira, and Linear to pull data automatically. Or you can upload files (GL exports, staff registers) in any common format. The platform includes a flexible CSV column mapper that handles every major UAE HRIS layout, so you do not have to reformat your data to match a fixed template. R&D evidence (commits, tickets, timesheets, cost lines) flows in and links itself to the right projects automatically.

A qualified UAE tax professional, not a chatbot or a template engine. The platform surfaces the AI's classifications and calculations, and the tax expert reviews every judgment call, flags anything borderline, and signs off on the final claim alongside you. You get a named human who puts their signature on the number, with the speed and cost efficiency of software doing the heavy lifting. This hybrid model is the key differentiator versus both pure software tools and pure consultancies.

The rules engine at the heart of the platform is designed to be updated without touching customer data. When the Ministry of Finance issues new guidance, when the Emirates R&D Council publishes procedural changes, or when Phase 2 parameters are announced, the rules update centrally and every active claim is re-evaluated against the new rules. Historical claims remain locked to the law as it applied at the time of filing, for audit consistency.