Businesses in the UAE are eligible for an annual Research and Development (R&D) Tax Credit of up to AED 2 million ($544,588).
Companies risk losing the chance to make a claim if they don’t receive approval in the year that the qualifying expense is incurred. With tiered rates of 15%, 35%, and 50% of eligible R&D spending, the credit is applicable to tax periods starting on or after January 1, 2026.
Dhruva, an associate of Ryan LLC, recently released a research that looks at how companies might use the qualifying exams for commercial initiatives and collect data to support their claims. Timing has been recognized as one of the main problems. Approval cannot be sought retroactively; it must be acquired in the year that the expense is incurred.
According to Nimish Goel, Leader, Middle East at Dhruva, “this changes the conversation for finance leaders.” “Our compliance is no longer the main question. It concerns whether we are making the most of the innovation in which we are already investing. It’s not always as easy as it seems to identify R&D. You need individuals who can sit with an engineering, technology, or product team and comprehend their goals, as well as those who are familiar with tax regulations.
Five qualifying tests are examined in the paper along with their applicability to commercial initiatives in various industries. Instead of being limited to specialized labs or research departments, qualifying activity might occur on construction sites, production lines, and among software teams.
According to Fran Wilhelm, Associate Partner and R&D Advisory Practice Lead at Dhruva, “businesses often assume that because they have no R&D department, they do no R&D.”
