UAE construction companies stand to unlock significant tax savings under the country’s newly operational Research and Development Tax Credit regime — but many firms are yet to fully recognise the opportunity.
Introduced under Ministerial Decision No. 24 of 2026 and effective from January this year, the framework offers credits of 15% to 50% on qualifying R&D expenditure. The regime is structured in tiers: 15% applies to the first AED 1 million of qualifying spend with at least two R&D staff; 35% applies between AED 1–2 million with at least six staff; and 50% applies on spend between AED 2–5 million where at least 14 R&D staff are employed.
For the construction sector, the implications are substantial. Innovation in construction is continuous — spanning materials science, structural engineering, digital tools, proptech, and safety systems — but much of this activity has historically not been classified or documented as formal R&D. Under the new regime, it can be.
Staff costs benefit from a 30% uplift in qualifying expenditure, strengthening the case for building dedicated R&D teams. Specialist roles such as materials scientists, proptech developers, and robotics engineers not only drive innovation but also unlock access to higher credit tiers.
The measure is designed to encourage private-sector investment in research and innovation, while supporting the UAE’s ambition to become a global hub for advanced industries and emerging technologies.
The key action for construction firms right now: audit existing activities against the qualifying criteria, document innovation processes systematically, and engage early with the pre-approval requirements. The tax benefit is real — but only for businesses that prepare.
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