UAE introduces new R&D tax credits and crypto VAT rules

The United Arab Emirates is implementing new tax regulations affecting research and development (R&D) and cryptocurrency transactions.

Under new R&D tax regulations, businesses can claim an annual credit of up to AED 2 million (approximately $544,588). These credits, which feature tiered rates of 15%, 35%, and 50% of eligible spending, apply to tax periods starting January 1, 2026. A critical requirement is that approval must be obtained in the same year the qualifying expense is incurred, as retroactive claims are not permitted. Qualifying activities are not limited to specialized labs and can include work performed by software teams or on production lines.

Additionally, the Federal Tax Authority has issued new directives regarding Value Added Tax (VAT) for cryptocurrency payments. To standardize reporting, companies receiving digital currency for goods or services must convert the value into UAE dirhams. This is done by selecting three approved exchange platforms—from a list including Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget, and Payward FZCO—and calculating the arithmetic average of the rates at the exact time of each transaction. Businesses must maintain strict timestamped logs of these rates for compliance.