Public Consultation on the R&D Tax Incentives

30 April 2024 - On 19 April 2024, the United Arab Emirates’ (UAE) Ministry of Finance (MoF) released the Public Consultation on the Potential Introduction of Research and Development (R&D) Tax Incentives in the UAE. 

Purpose of R&D Public Consultation 

• Businesses engage in R&D to innovate, gain a competitive edge, and enhance profitability, with benefits often extending into the broader society. However, high costs, uncertain outcomes, and delayed returns can deter private sector investment in R&D. To address this underinvestment, governments often provide support through grants or tax incentives, as it offers predictability and reduced tax costs. 
• Recognizing the importance of R&D in creating a diverse and dynamic economy, the UAE government is contemplating to introduce R&D tax incentives under Corporate Tax Law to reduce the financial burden on businesses and encourage a wide range of enterprises to invest in R&D. 
• This public consultation aims to gather input from stakeholders on the design process of the tax incentive and fundamental R&D principles.

Proposed design features of R&D Incentive

Main design features being considered by UAE government for the potential R&D tax incentive are as follows: 

1. Definition of R&D
2. Qualifying businesses
3. Qualifying R&D activities
4. Qualifying R&D expenditure
5. Type(s) and form(s) of incentive
6. How unutilized benefits will be treated and
7. Administrative measures.

The MoF has issued 20 questions to gather feedback from stakeholders on the design features outlined above. These questions are available at the following link. The deadline to provide comments is 14 May 2024.

In case you would like Deloitte to add your suggestions / comments in its own submission for the Public Consultation, then reach out to any tax member of Deloitte and we would be glad to assist.

Contacts

We have a dedicated Business Tax team based in the UAE who have in-depth experience and can support you throughout your readiness journey. Please get in touch with one of our tax experts listed on the following page.

You can also contact us and submit all your queries on this email cituae@deloitte.com.