The United Arab Emirates has strengthened its position as a global hub for sports development and international sports organizations. In line with this vision, the UAE Cabinet issued Cabinet Decision No. 1 of 2026, granting corporate tax exemptions to certain sports-related entities under the Corporate Tax framework.
This decision operates under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and provides clarity on the eligibility, conditions, and compliance requirements for sports entities seeking exemption.
Who Qualifies for the Exemption?
The exemption is not universal for all sports-related businesses. To benefit from Cabinet Decision No. 1 of 2026, an organization must fall into one of the following three categories:
- Other Sports Entities: A Juridical person that is wholly owned and controlled (directly or indirectly) by an International Sports Entity.
- Ancillary Entities: A juridical person that is wholly owned and controlled, directly or indirectly, by an International Sports Entity and is established solely to carry out support, administrative, or operational activities.
The "Non-Commercial" Mandate
The defining characteristic for eligibility is the non-commercial nature of the entity. The authorities have established strict criteria to ensure that the exemption serves the public interest:
- Primary Objective: The entity must not carry out any business or commercial activities, except those directly connected to and necessary for achieving its principal or sole objectives, such as the promotion, management, or organization of sports.
- Income Reinvestment: All income and assets must be used exclusively for achieving its principal or sole objectives or to cover “necessary and reasonable” operational expenses.
- No Private Benefit: No portion of the entity’s income or assets may be distributed, allocated, or made available for the personal benefit of any shareholder, member, trustee, founder, or settlor.
- Official Recognition: The entity must be formally recognized by the Ministry of Sports or another Competent Authority.
Submission of Information
An International Sports Entity, Sports Entity, or Ancillary Entity claiming corporate tax exemption must, upon request by the Authority, submit all relevant data, information, and documents within the prescribed timeframe. This enables the Authority to verify compliance with the prescribed definitions and exemption conditions.
Loss of Exempt Status
If an exempt International Sports Entity, Sports Entity, or Ancillary Entity fails to comply with the applicable exemption conditions or ceases to meet the prescribed definitions during a tax period, it shall lose its status as an Exempt Person. In such cases, the exemption will cease from the beginning of that tax period. However, certain statutory exceptions may apply in limited circumstances.
Conclusion
The Cabinet Decision provides a clear and regulated framework for granting corporate tax exemption to qualifying sports entities, subject to continuous compliance with prescribed conditions. Eligible organizations must ensure proper governance and appropriate use of income to maintain their exempt status. The Decision is effective from 1 June 2023, aligning with the implementation of the UAE Corporate Tax regime.
