UAE companies can now apply for pre-approval of their research and development projects on TAWWER, the online platform of the Emirates Research and Development Council (ERDC). Pre-approval is the first step to claiming the UAE R&D Tax Credit, which is worth up to AED 2 million a year. A company with a calendar financial year must file its application for 2026 within 40 business days of 31 December 2026, which falls in late February 2027.
The Council set out the procedure in ERDC Decision No. 01 of 2026, published on 14 October 2026. Without pre-approval, the credit cannot be claimed.
UAE R&D Tax Credit: Key Facts
- Credit rate: 15%, 35% and 50% on bands of qualifying R&D spend up to AED 5 million.
- Maximum credit: AED 2 million per company or Tax Group per year.
- Minimum spend: AED 500,000 per R&D project per year.
- Applies from: tax periods starting on or after 1 January 2026.
- Who approves: ERDC approves the project on TAWWER. The Federal Tax Authority (FTA) calculates the credit in the Corporate Tax return.
- Fee: none.
What Is the UAE R&D Tax Credit?
The R&D Tax Credit reduces the Corporate Tax or Top-up Tax a company pays, based on what it spends on qualifying research and development in the UAE. It is not a cash grant and it is not refundable. If the credit is larger than the tax due, the unused part can be carried forward to later years.
Three decisions set the rules:
- Cabinet Decision No. 215 of 2025 created the credit.
- Ministerial Decision No. 24 of 2026, issued on 18 March 2026, set the rates and conditions.
- ERDC Decision No. 01 of 2026 set the pre-approval procedure. The Council has published an unofficial English translation; the Arabic text governs.
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Which Companies Can Claim the UAE R&D Tax Credit?
A company can claim if it is:
- a UAE company or other legal entity, including a free zone company, that pays Corporate Tax or Top-up Tax and carries out qualifying R&D in the UAE, or
- a foreign company that carries out qualifying R&D through a Permanent Establishment in the UAE and pays tax on that income.
The company must bear the cost of the R&D and have a share in the income from its results.
Which Companies Cannot Claim the UAE R&D Tax Credit?
- Companies that elected Small Business Relief. The two cannot be used for the same period.
- Companies that pay neither Corporate Tax nor Top-up Tax.
- Qualifying Free Zone Persons taxed at 0% on their R&D income. A Qualifying Free Zone Person can claim only if it pays 9% Corporate Tax on the income from the R&D activities, or pays Top-up Tax.
What Counts as Qualifying R&D for the UAE Tax Credit?
The activity must be carried out in the UAE and must meet all five conditions in Article 3 of Ministerial Decision No. 24 of 2026:
- Novel: it aims to produce new findings.
- Creative: it is based on original concepts or hypotheses.
- Uncertain: the outcome, or the way to reach it, is not known in advance.
- Systematic: it follows a plan and a budget.
- Transferable or reproducible: the results can be applied or repeated elsewhere.
The uncertainty must be scientific or technological. Commercial or market uncertainty does not count. Research in social sciences, humanities and the arts is excluded. Work done outside the UAE is excluded, even if it belongs to the same project.
Does Software or AI Development Qualify for the UAE R&D Tax Credit?
It can. Software, data and artificial intelligence work qualifies when it sets out to resolve a scientific or technological uncertainty and meets the five conditions. Routine development does not qualify. The Council lists configuration, customisation, maintenance, moving software between platforms, and using known methods to reach a predictable result as routine.
How Much Is the UAE R&D Tax Credit? Rates and Staff Thresholds
The credit is calculated in bands. Each band has its own rate and its own minimum number of R&D staff.
| Qualifying R&D spend in the year | Minimum average R&D staff | Credit rate |
| First AED 1 million | 2 | 15% |
| Above AED 1 million, up to AED 2 million | 6 | 35% |
| Above AED 2 million, up to AED 5 million | 14 | 50% |
Spend above AED 5 million earns no further credit, so the maximum is AED 2 million a year. For a Tax Group, the spend and staff of all qualifying members are added together.
Example. A company spends AED 1,000,000 on R&D staff and AED 200,000 on materials, with an average of 6 R&D staff. Staff costs are increased by 30% to cover overheads, so qualifying spend is AED 1,500,000. The credit is AED 150,000 on the first million plus AED 175,000 on the next AED 500,000. Total: AED 325,000.
How Too Few R&D Staff Reduce the R&D Tax Credit Rate
The band that misses its staff minimum drops to the lower rate. The other bands are not affected. The Council’s calculator on TAWWER gives these results:
| Qualifying spend | Average R&D staff | Credit |
| AED 5 million | 14 | AED 2,000,000 |
| AED 5 million | 13 | AED 1,550,000 |
| AED 3 million | 6 | AED 850,000 |
| AED 3 million | 2 | AED 450,000 |
| AED 3 million | 1 | No credit |
One person short of 14 costs AED 450,000 at the top level of spend. A company with fewer than 2 R&D staff on average gets no credit.
How the Average Number of R&D Staff Is Counted for the Tax Credit
Add the number of R&D staff for each month of the year, counting a person who worked part of a month. Divide the total by the number of months in which R&D was carried out. R&D staff are full-time or full-time-equivalent employees and externally provided workers who are directly engaged in the R&D. Staff of a UAE subcontractor who work directly on the project also count.
Which Costs Qualify for the UAE R&D Tax Credit?
- Staff costs: salaries, allowances, bonuses, medical insurance, pension, end-of-service gratuity, benefits in kind and R&D training. Staff must work in the UAE under the company’s direct control. For a person who works part-time on R&D, only that share counts. The total is increased by 30%.
- Consumables: materials used up in the R&D, including water, fuel and power, non-capital licence fees, and payments to clinical trial participants.
- Subcontracting fees: R&D contracted to a UAE-based party and carried out in the UAE, with no further subcontracting. A related-party subcontractor must have audited financial statements.
- Cost contribution arrangements: the company’s arm’s-length share of jointly run R&D, for the part done in the UAE.
Each project needs at least AED 500,000 of qualifying spend in the year, tested before the 30% staff increase. Costs paid for by a grant, costs that already receive another UAE tax incentive, employee share option plans and charges between members of the same Tax Group do not qualify.
How to Claim the UAE R&D Tax Credit in Three Steps
| Step | Where | What is filed |
| 1. Pre-approval | TAWWER (ERDC) | One application for each R&D project, for each year |
| 2. Expenditure Confirmation | TAWWER (ERDC) | Actual activities, average R&D staff and actual spend by category |
| 3. Claim | EmaraTax (FTA) | The claim, inside the Corporate Tax or Top-up Tax return |
Steps 1 and 2 must both be complete before the claim. TAWWER does not calculate the credit. The FTA does that from the confirmed figures.
How to Apply for R&D Tax Credit Pre-Approval on TAWWER
How to Get Access to the TAWWER Platform
- An authorised person signs in to TAWWER with UAE PASS.
- That person adds the company and its Tax Registration Number.
- The company’s authorised signatory registered with the FTA approves the access request.
Registration is done once. A registered Tax Agent or authorised representative can file the application for the company once the authorisation is given to the Council. For a Tax Group, the parent company applies.
The Seven Sections of the TAWWER Pre-Approval Application
- Company details: legal name, Tax Registration Number, trade licence, Tax Group status.
- Project description: the objective, the knowledge gap and the expected outcomes.
- Research methodology: the method, the technical uncertainty, and how each activity meets the five conditions.
- R&D staff and time: roles, location, monthly headcount and time spent on the project.
- Budget plan: estimated qualifying spend by category.
- Documents: technical documents, subcontracting details and any cost contribution arrangement.
- Declaration: signed on behalf of the company.
TAWWER provides templates for the project description, the criteria mapping, the staff schedule and the spend schedule.
What Happens After a Pre-Approval Application Is Submitted to ERDC
The Council either pre-approves or rejects the project. It can approve only part of a project or a lower amount. If it needs more details it sends a Request for Information, and the company has 20 business days to reply. No reply means rejection. The Council has set no time limit for its own review, so early filing is safer.
A rejected project can be filed again, but only inside the original deadline. A company can also ask for reconsideration within 30 business days of a decision.
UAE R&D Tax Credit Deadlines for 2026 and 2027
| Financial year | Pre-approval application | Expenditure Confirmation | Tax return and claim |
| 1 January to 31 December 2026 | Within 40 business days of year end (late February 2027) | 30 June 2027 | 30 September 2027 |
| 1 April 2026 to 31 March 2027 | 31 March 2027 | 30 September 2027 | 31 December 2027 |
| 1 July 2026 to 30 June 2027 | 30 June 2027 | 31 December 2027 | 31 March 2028 |
The rule changes after the first year. For a year ending on or before 31 December 2026, the application is due within 40 business days after the year ends. For any year ending after that date, the application is due on or before the last day of the year. A company with a March or June year end must therefore apply before its year closes.
A project that runs over more than one year needs a new application for each year. Late applications are accepted only in exceptional circumstances.
What to File After R&D Tax Credit Pre-Approval: Expenditure Confirmation and Claim
Expenditure Confirmation. Within six months of the year end, the company reports on TAWWER what it did, its average R&D staff and its actual spend. If this is late, or fails the Council’s compliance check, the pre-approval stops having effect for that project and year and the credit cannot be claimed. No extension can be requested in advance.
The claim. The claim is filed with the Corporate Tax return and must include:
- proof of pre-approval,
- a declaration signed by senior management,
- a breakdown of qualifying R&D spend, and
- audited financial statements.
Records. Technical documents showing the objectives, methods, experiments and findings must be kept for seven years after the year ends.
When the FTA Can Claw Back the UAE R&D Tax Credit
- Conditions not met. If the company did not meet the conditions for a project throughout, credit already used must be repaid and unused credit is lost. Penalties apply.
- Change of status within five years. If, within five years of its last claim, the company stops being a Taxable Person, becomes a Qualifying Free Zone Person, applies Small Business Relief, goes into liquidation or moves its domicile outside the UAE, the credit is taken back.
- Artificial arrangements. Splitting a business to multiply the thresholds, or any arrangement made mainly to obtain or increase the credit, can be reversed by the FTA.
Pre-approval does not guarantee the credit. The FTA still checks that the costs are deductible and priced at arm’s length.
How UAE Companies Should Prepare for R&D Tax Credit Pre-Approval Now
- List each R&D project and test it against the five conditions.
- Check each project reaches AED 500,000 of qualifying spend before the staff increase.
- Count R&D staff month by month and compare the average with 2, 6 and 14.
- Confirm the company is not on Small Business Relief and, if in a free zone, that the R&D income is taxed at 9%.
- Collect the technical documents written during the work. The Council expects records made at the time, not rebuilt later.
- Register on TAWWER and file early, so a rejected project can still be filed again before the deadline.
- Schedule the audit so audited financial statements are ready for the claim.
UAE R&D Tax Credit: Frequently Asked Questions
Is the UAE R&D Tax Credit refundable?
No. The credit can only reduce Corporate Tax or Top-up Tax. Any unused amount can be carried forward if the same owners keep at least 50% of the company, or the company continues the same or a similar business.
Can a free zone company claim the R&D Tax Credit?
Yes, if it pays Corporate Tax or Top-up Tax. A Qualifying Free Zone Person must pay 9% Corporate Tax on the income from its R&D activities, or pay Top-up Tax. If its R&D income is taxed at 0% and it pays no Top-up Tax, it cannot claim.
Can a company using Small Business Relief claim the credit?
No. A company that elected Small Business Relief cannot claim for that period. A company that claims the credit and then applies Small Business Relief within five years must repay the credit it used.
What is the deadline to apply for pre-approval for 2026?
For a financial year ending on 31 December 2026, the application must be filed within 40 business days of the year end, which falls in late February 2027. For a year ending after 31 December 2026, the application must be filed on or before the last day of that year.
Does pre-approval guarantee the tax credit?
No. Pre-approval confirms the project qualifies as R&D. The company must still file the Expenditure Confirmation within six months of the year end, and the FTA decides the amount when the tax return is filed.
Is there a fee to apply on TAWWER?
No. There is currently no fee for the application, for replying to a Request for Information, for the Expenditure Confirmation or for a reconsideration request.
How long does ERDC take to review an application?
There is no fixed review period. The time depends on the application and on whether the Council asks for more information.
Can one company apply for more than one R&D project?
Yes. Each project needs its own application, and several can be filed for the same year. Each project must separately reach AED 500,000 of qualifying spend.
Are audited financial statements required to claim the credit?
Yes. Audited financial statements must be filed with the claim. A related-party subcontractor doing the R&D must also have audited financial statements.
Can a tax agent file the pre-approval application?
Yes. A Tax Agent registered with the FTA, an authorised representative or a Legal Representative can file on the company’s behalf once the authorisation is submitted to the Council.
Need Expert Advice?
Contact the team at Farahat & Co. for professional support and expert insights for businesses operating in the UAE.
How Farahat & Co. Helps With UAE R&D Tax Credit Claims
Farahat & Co. is a registered tax agent and audit firm in the UAE. Our corporate tax consultants review whether your projects and costs qualify, prepare the pre-approval application and the Expenditure Confirmation, and include the claim in your Corporate Tax return. Our auditors prepare the audited financial statements the claim requires.
Contact Farahat & Co. to check your R&D Tax Credit position before the deadline.
Sources: Cabinet Decision No. 215 of 2025; Ministerial Decision No. 24 of 2026; ERDC Decision No. 01 of 2026 (unofficial translation); TAWWER; Emirates Research and Development Council. This article is general information, not tax advice.
