The UAE Cabinet has issued Cabinet Decision No. 1 of 2026, clarifying the Corporate Tax (CT) treatment of certain sports-related entities under Federal Decree-Law No. 47 of 2022 (the UAE Corporate Tax Law).
The Decision provides a specific exemption from Corporate Tax for qualifying international and sports entities, subject to strict conditions.
This update is particularly relevant for international sports federations, regional governing bodies, and their UAE-established subsidiaries or operational arms.
Who Can Qualify for the Exemption?
The Decision introduces the following categories:
1) International Sports Entity
A juridical person (e.g., federation, association, committee, council) whose main objective is the promotion, administration, or development of sports at an international or regional level, and which is recognized by the Ministry of Sports or relevant competent authorities.
2) Sports Entity
An entity wholly owned and controlled (directly or indirectly) by an International Sports Entity and established to promote, administer, or develop sports.
3) Ancillary Entity
An entity wholly owned and controlled by an International Sports Entity and established solely to carry out activities that are administrative or operational in nature and ancillary to the objectives of the International Sports Entity or its Sports Entity.
Conditions for Corporate Tax Exemption
An International Sports Entity, Sports Entity, or Ancillary Entity may be exempt from Corporate Tax provided that:
1. No Commercial Business Activity
The entity must not conduct business activities except those directly related to fulfilling its principal objective (i.e., promoting or developing sports).
2. Use of Income and Assets
Income and assets must be used exclusively for:
- Achieving its principal objective; or
- Paying necessary and reasonable related expenses.
3. No Private Benefit
No part of income or assets may be distributed for the personal benefit of shareholders, members, founders, trustees, or settlors, except in very limited cases (e.g., qualifying public benefit entities, government entities, or other qualifying sports bodies).
Ongoing Compliance Requirements
The Federal Tax Authority (FTA) may request supporting documentation to verify that the entity:
- Meets the relevant definition under the Decision, and
- Continues to satisfy all exemption conditions.
Failure to meet the conditions at any time during a tax period will result in the entity losing its exempt status from the beginning of that tax period, unless specific relief provisions apply under the Corporate Tax Law.
Effective Date
The Decision is effective from 1 June 2023, meaning it applies retrospectively from the start date of the UAE Corporate Tax regime.
XB4 Insights
Cabinet Decision No. 1 of 2026 provides welcome clarity for international and regional sports organizations operating in the UAE. However, the exemption is conditional and requires careful assessment of structure, activities, and governance arrangements.
From our perspective, affected entities should proactively:
- Review their legal structure and ownership chain to confirm alignment with the definitions of International Sports Entity, Sports Entity, or Ancillary Entity.
- Evaluate whether all activities undertaken are strictly connected to the promotion or development of sports and do not constitute unrelated commercial business activities.
- Assess governance documents and operational practices to ensure there is no direct or indirect private benefit.
- Maintain robust documentation to substantiate compliance in the event of a Federal Tax Authority (FTA) review.
While the Decision supports the UAE’s position as a hub for international sports bodies, the exemption is not automatic. A detailed technical review is essential to mitigate the risk of losing exempt status retrospectively.
XB4 remains available to assist clients with eligibility assessments, structuring reviews, and ongoing Corporate Tax compliance support.
If you would like to assess whether your organization qualifies for this Corporate Tax exemption or require assistance with a detailed review, please get in touch with our tax team at tax@xb4.com.
