Construction companies across the UAE may be overlooking one of the most valuable outcomes of the country’s new R&D Tax Credit regime. Introduced under Ministerial Decision No. 24 of 2026 and effective from 1 January 2026, the framework offers credits of 15% to 50% on qualifying R&D expenditure. Yet, according to Dhruva, a Ryan Affiliate, many construction businesses have yet to identify the full extent of qualifying activity or put in place the processes required to claim these benefits.

As one of the UAE’s most economically significant sectors, construction is uniquely positioned to benefit from the regime. Innovation in this sector is continuous, spanning materials, construction methods, digital tools and safety systems but much of it has historically not been classified or documented as R&D.

“The construction sector innovates constantly, in materials, in methods, in software, in safety. The challenge is that much of this activity has never been labelled R&D, and therefore never documented as such. That is precisely where value is being left on the table. Companies that begin mapping their qualifying activities now, and build the evidence trail the regime demands, will be the ones positioned to capture this benefit when it matters most,” said Nimish Goel, Leader Middle East, Dhruva, Ryan LLC Affiliate.

To qualify under the regime, R&D activities must meet five criteria aligned with the OECD Frascati Manual: they must be novel, creative, uncertain in outcome, systematic, and transferable or reproducible. For construction businesses that approach innovation with defined objectives, structured experimentation and documented results, a wide range of activity meets this threshold.

In practice, qualifying activity in the construction sector can include the development of advanced materials such as low-carbon concrete and smart composites, experimentation with modular construction techniques and prefabrication systems, and proprietary software development for Building Information Modelling (BIM), digital twins and AI-driven project management. Sustainability innovation also qualifies, including net-zero building systems and passive cooling technologies suited to UAE conditions, as does the adoption of robotics and drone-based construction and inspection methods.

The critical distinction lies between routine construction activity and genuine R&D. Applying an established methodology to a new project does not qualify. Systematically resolving technical uncertainty through experimentation and documenting that process does.

A distinguishing feature of the UAE regime is its dual-threshold structure. Each credit tier requires businesses to meet both a minimum level of qualifying expenditure and a minimum average R&D headcount. The first AED 1 million of qualifying spend attracts a 15% credit with at least two R&D staff; spend between AED 1 million and AED 2 million qualifies for 35% with at least six staff; and spend between AED 2 million and AED 5 million attracts 50% with at least fourteen. Where headcount thresholds are not met, the applicable credit rate is reduced accordingly.

For construction companies, this makes workforce planning integral to tax strategy. Specialist roles including materials scientists, structural engineers working on novel challenges, proptech developers and robotics engineers not only drive innovation but also determine access to higher credit tiers. Staff costs additionally benefit from a 30% uplift in qualifying expenditure, further strengthening the case for building dedicated R&D capability.

“This is not just a tax incentive; it represents a structural shift in how innovation is recognised within the construction sector. Businesses that act early will not only benefit financially but also strengthen their long-term technical capabilities,” added Nimish.

The regime places significant emphasis on contemporaneous documentation and structured processes. Pre-approval from the relevant authority is mandatory, and businesses must maintain detailed technical records of R&D objectives, methodologies, experiments and outcomes for a period of seven years. For construction companies, this requires embedding R&D tracking into project workflows from the outset, rather than attempting to reconstruct evidence retrospectively.

Construction groups operating centralised engineering or shared technology platforms should also review their structures carefully. Intra-group transactions are excluded from qualifying expenditure, making it critical to ensure that R&D costs are appropriately allocated at the entity level.

“The UAE’s construction sector is building the physical infrastructure of a knowledge economy. It is fitting that those who innovate within it now have access to the same calibre of R&D incentive as their counterparts in technology or manufacturing. The question is not whether to engage, but how quickly companies can build the processes to do so effectively,” concluded Nimish.

MOZN, a leading enterprise AI company, today announced that it has been named among notable vendors in Forrester’s Financial Crime Management Solutions Landscape Q1 2026 report. This inclusion marks a significant milestone for MOZN and reinforces its position among global innovators.

The Forrester report, which lists 42 vendors, provides financial institutions with an overview of notable vendors and the key market dynamics shaping the rapidly evolving financial crime management (FCM) market, including fraud and anti-money laundering (AML) solutions.

MOZN was listed in the report with a geographic focus on Europe, the Middle East, and Africa (EMEA) and the Asia-Pacific (APAC) regions, and an industry focus on financial services, government, and insurance. The recognition underscores the company’s sustained investment in AI-driven innovation and its focus on delivering scalable, future-ready financial crime solutions tailored to high-growth and complex regulatory markets.

At the center of this recognition is FOCAL, MOZN’s end-to-end financial crime management platform. Built on a unified FRAML (Fraud + AML) architecture, FOCAL leverages agentic AI to automate data integration, accelerate risk-scoring, and streamline alert triage, enhancing investigator productivity while preserving human judgment. The platform offers flexible deployment options, allowing organizations to modernize their operations in a way that aligns with their technical and regulatory needs.

“MOZN’s inclusion in Forrester’s report reflects the progress we have made in building technology that truly transforms how institutions combat financial crime,” said Dr. Mohammed Alhussein, Founder and CEO of MOZN. “As Saudi Arabia designates 2026 as the Year of Artificial Intelligence, it reinforces the Kingdom’s ambition to lead in shaping the future of AI globally. At MOZN, we are proud to contribute to this vision by engineering AI-native platforms that make financial crime prevention more proactive, precise, and effective. This milestone reflects both the momentum of our mission and the growing global relevance of technology built in the region.”

By combining deep regional expertise with global technology standards, MOZN continues to advance its purpose of empowering organizations with intelligence that matters. The company remains committed to delivering AI-native solutions purpose-built for the world’s most regulated and knowledge-intensive sectors, enabling institutions to operate with greater clarity, confidence, and control. As demand for advanced AI-driven capabilities accelerates worldwide, MOZN is expanding its global footprint, supporting organizations as they navigate an increasingly complex financial crime landscape.

The UAE Ministry of Finance has issued Ministerial Decision No. 24 of 2026, setting out the detailed implementation rules for the country’s first-ever Research and Development (R&D) Tax Credit regime under the Corporate Tax framework. Effective for Tax Periods commencing on or after 1 January 2026, the decision establishes a progressive, tiered credit structure with rates of 15%, 35% and 50%, linked to both the level of qualifying R&D expenditure and the number of R&D staff employed. The maximum qualifying expenditure is capped at AED 5 million per entity or Tax Group per year.

“The R&D Tax Credit is a landmark development, but it is not a simple year-end adjustment. The dual-threshold design means this is as much a workforce planning exercise as a tax planning one. Businesses need to understand that pre-approval from the Council is mandatory before any credit can be claimed – this is a precondition, not an administrative formality. Companies that begin mapping their R&D activities against the Frascati Manual criteria, quantifying qualifying expenditure and building their documentation framework now will be in the strongest position when it comes time to file,” said Nimish Goel, Leader Middle East, Dhruva, Ryan LLC Affiliate.

The move represents one of the clearest signals yet that the UAE intends its tax framework to actively incentivise innovation, influence capital allocation and support the country’s long-term economic diversification going well beyond revenue collection and international alignment. For businesses operating in manufacturing, technology, engineering, healthcare, food and beverage, agriculture, and other innovation-led sectors, the key consideration is whether internal systems are equipped to capture the benefit.

The credit operates on a dual-threshold basis that is unlike most international R&D incentive regimes. To access each tier, a business must satisfy both a minimum qualifying expenditure level and a minimum average R&D headcount. The first AED 1 million of qualifying spend attracts a 15% credit, requiring at least two R&D staff. The portion between AED 1 to 2 million qualifies at 35%, requiring at least six staff. Spend between AED 2 to 5 million qualifies at 50%, requiring at least fourteen staff. If the headcount threshold is not met, the credit rate drops to the highest tier where both conditions are satisfied, creating material cliff-edge effects that make workforce planning an integral part of tax planning for the first time in the UAE.

Qualifying R&D activities must meet five criteria drawn from the OECD Frascati Manual; they must be novel, creative, uncertain in outcome, systematic, and transferable or reproducible. Activities in social sciences, humanities and the arts are excluded, and only R&D conducted within the UAE qualifies. Qualifying expenditure falls into three categories: staff costs (which receive a 30% overhead uplift), consumable costs, and subcontracting fees paid to UAE-based contractors. Intra-group transactions are consistently excluded from qualifying expenditure, a design choice that will require groups with centralised R&D functions to review their cost allocation and transfer pricing arrangements carefully.

The decision also introduces a mandatory pre-approval process administered by the Council, ongoing compliance reporting obligations, and a seven-year record-keeping requirement for technical documentation covering R&D objectives, methodologies, experiments and findings. These requirements signal that the UAE authorities expect robust, contemporaneous evidence of qualifying activities, not retrospective assembly at the time of filing.

Commenting on the development, Justin Arnesen, Principal, Practice Leader, Europe & Asia Pacific Innovation Funding, Ryan, said, “Ryan’s global experience in R&D tax credits shows that the difference between a policy announcement and a commercial outcome lies in the rigour of eligibility analysis, documentation and claims management. We have helped UK businesses receive over AED 2.5 billion in innovation funding through R&D Tax credits. These outcomes were driven by disciplined processes, not just the existence of a credit. This initiative not only aligns with global best practices but also sends a clear signal to multinational organisations and emerging enterprises that the UAE is serious about fostering a knowledge and innovation-based economy.”

Implications for Multinational Groups under Pillar Two

For multinational groups within the scope of the UAE’s Domestic Minimum Top-up Tax (DMTT), the R&D Tax Credit adds an important layer to Effective Tax Rate (ETR) modelling. Because the credit is non-refundable, it is likely to be treated as a reduction of covered taxes under the Global Anti-Base Erosion (GloBE) rules rather than as a Qualified Refundable Tax Credit, a distinction that can lower the jurisdictional ETR rather than improve it. For groups operating at or near the 15% minimum rate, this means the credit could paradoxically increase Top-up Tax exposure even as it reduces Corporate Tax liability.

However, the decision provides a mechanism for unutilised credits to offset top-up tax directly through the Domestic Group structure, which partially mitigates this effect. Multinationals should model the net impact across both Corporate Tax and top-up tax before claiming, and factor in the five-year claw-back provision that applies if the entity’s status changes – including becoming a qualifying free zone person or redomiciling outside the UAE.

For businesses with cross-border operations, the commercial value of the R&D Tax Credit extends beyond the direct tax saving. The credit’s treatment in the group’s wider international tax profile, including its classification under tax treaties, its interaction with Pillar Two ETR calculations, and its impact on transfer pricing for cost contribution arrangements will require integrated advisory across multiple disciplines. Groups conducting joint R&D through cost contribution arrangements should note that only the arm’s length share of contributions attributable to UAE-based R&D qualifies, adding a transfer pricing dimension to credit planning. The Ministerial Decision applies to Tax Periods and Fiscal Years commencing on or after 1^st January 2026.

“The UAE has built a thoughtful, well-structured framework with clear international lineage – the Frascati Manual criteria, the tiered incentive design, the Pillar Two integration. Early investment in activity mapping, expenditure tracking and documentation is likely to determine the extent to which businesses can access and sustain benefits under the regime,” concluded Nimish.