Important Amendments to the Corporate Tax Law for Research & Development and High Value Employment Activities

The UAE is further improving its business-friendly system, showing its commitment towards national goals, for example increasing economic power and generating more easier way to run a business.

The Ministry of Finance is planning to introduce and launch the below corporate tax benefits to support long-term growth, modification, and investment.

Research and Development Tax Incentive: To promote new research, new innovations, and economic progress in the UAE, a research and development (R&D) tax incentive is being arranged. A public consultation was conducted in April 2024, based on the feedback and result of that consultation, the planned incentive program is anticipated to take effect for the tax periods beginning on or after first January 2026.

This research and development (R&D) tax incentive will depend on business expenses, offering 30% to 50% tax credits. This will be refundable based on business’s income and the number of staff in the UAE.  The research and development (R&D) activities that will qualify for this benefit will follow the OECD’s Frascati rules and those activities should be done within the UAE.

High Value Employment Activities: One more tax benefit being planned is a refundable tax credit for important, high value job roles. This goal is to push and promote businesses towards work that plays important part in increasing economic growth, supporting benefits, and strengthening the UAE’s position worldwide. This benefit is expected to start on First of January 2025 and will be given as a percentage of approved salary expenses for the staff engaged in high value job positions. This involves C-suit executives and other senior business leaders who add major value to the UAE’s economy.

The final version and execution of all these suggested tax benefits depend on legal approval. The Ministry of Finance will share further information and a road map for taxpayers about these benefits in the near future.

To help you understand and make best use of all the tax benefits and incentives under the UAE corporate tax law, contact us today for quality corporate tax services.