Conditions to be met
The regime is especially relevant for businesses that:
- Develop software
- Implement technology solutions
- Manage licenses or patents
- Monetize copyrights or proprietary know-how
Key things to know
To qualify, a company must actively participate in the creation of the IP, not merely own the rights. The focus is on genuine development activity, substantiated by incurred costs.
The calculation is based on the proportion of qualifying R&D expenditures, such as:
- Developer salaries
- Infrastructure expenses
- Fees paid to independent contractors
Expenses like the purchase of ready-made solutions or IP development carried out abroad do not count toward the benefit.
How it works?
Overall IP income × (qualifying R&D costs ÷ total R&D costs) × 130% = 0%-rated IP income
The sum of all costs directly related to the development of your IP.
Qualifying R&D costs
- costs of internal R&D (e.g. employees' salary, equipment purchase)
- costs of outsourcing R&D to independent developers abroad
- costs of outsourcing R&D to any developers within UAE
Qualifying costs increase the nexus ratio and your rights to the benefits.
Unqualifying R&D costs
- costs of software and patents purchases
- costs of outsourcing R&D to related developers abroad
Unqualifying costs decrease the nexus ratio and your rights to the benefits.
