Cabinet Decision No. 1 of 2026 creates a dedicated corporate tax exemption for sports-related entities in the UAE. Issued on 12 January 2026 and applying retrospectively from 1 June 2023, it operates under paragraph (i) of Clause 1 of Article 4 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022). It covers international sports bodies, the sports entities they own, and the ancillary entities that support them.
Key takeaways
- Cabinet Decision No. 1 of 2026 introduces a specific corporate tax exemption for sports-related entities under Article 4 of the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022).
- It was issued on 12 January 2026 but applies retrospectively to tax periods from 1 June 2023, matching the start of the Corporate Tax regime.
- Three categories can qualify: International Sports Entities, Sports Entities wholly owned and controlled by them, and Ancillary Entities that perform supporting administrative or operational functions.
- Exemption depends on five conditions, including carrying on no business activity beyond the entity's core purpose and paying no benefit to members, trustees or founders.
- Funds and assets may only flow to eligible recipients — a Qualifying Public Benefit Entity, a government entity, an International Sports Entity, a Sports Entity or an Ancillary Entity.
- Breaching a condition causes the exemption to be lost from the start of the relevant tax period, not merely from the date of the breach.
Which entities can qualify?
Three types of entity can qualify: International Sports Entities (recognised international or regional governing bodies), Sports Entities wholly owned and controlled by them, and Ancillary Entities that carry out only supporting administrative or operational functions. Each is defined by both its purpose and its ownership, as the table sets out.
| Category | Who it covers |
|---|---|
| International Sports Entities | International or regional governing bodies — federations, associations, committees — that promote or administer sport and are recognised by the Ministry of Sports, the IOC, the IPC, the Olympic Council of Asia or a similar authority |
| Sports Entities | Entities wholly owned and controlled by an International Sports Entity, established to promote, administer or develop sport and registered with the Ministry of Sports or the Competent Authority |
| Ancillary Entities | Entities wholly owned and controlled by an International Sports Entity that solely carry out administrative or operational activities supporting the group |
The common thread is that the exemption is built for genuinely non-commercial sports governance and its support functions, not for commercial ventures that happen to be sports-adjacent.
The five conditions for exemption
Qualifying status is not automatic — an entity must meet, and keep meeting, five conditions:
- No business activity, except activities directly linked to its principal or sole objectives. Ordinary commercial trading falls outside the exemption.
- Income used exclusively for furthering those objectives or for related, necessary expenditure — funds cannot be diverted to unrelated purposes.
- No personal benefit: no income or assets may be paid to shareholders, members, trustees or founders.
- Eligible recipients only: funds and assets may pass only to a Qualifying Public Benefit Entity (QPBE), a government entity, an International Sports Entity, a Sports Entity or an Ancillary Entity.
- Ministerial conditions: any further conditions the Minister prescribes by decision must also be satisfied.
Taken together, these conditions test whether the entity is genuinely purpose-driven. An entity that earns unrelated commercial income, or that channels value to its founders, sits outside the exemption regardless of its label.
What retrospective application from 1 June 2023 means
Although issued in January 2026, the Decision applies from 1 June 2023 — the date the Corporate Tax regime began. That backdating lets eligible entities revisit the positions they have taken since corporate tax started and align earlier tax periods with the exemption where the conditions were met. Entities that may qualify should review their filings for the intervening periods rather than assuming the exemption applies only prospectively.
The exemption is not a one-time grant. If an entity breaches a condition — for example, by earning unrelated commercial income or channelling funds to an ineligible recipient — the exemption is withdrawn from the very start of that tax period. That exposes the entity's full income for the period to corporate tax, not just the offending amount.
The ownership and control test
For Sports Entities and Ancillary Entities, the exemption turns on being wholly owned and controlled by an International Sports Entity. That is a stricter test than ownership alone: both the shareholding and the control of the entity must sit with the qualifying international body. Groups should map their ownership chains carefully, because an entity that is only partly owned, or that is controlled in practice by another party, will fall outside the definition. In practice, SBC advisers find this is the condition most likely to fail on review, because control can drift to another party without the paperwork ever changing. The same discipline applies to the eligible-recipients condition — any onward flow of funds or assets must be traced to confirm it reaches only a permitted recipient, such as a Qualifying Public Benefit Entity or another entity within the sports group.
Keeping the exemption: documentation and monitoring
The Decision pairs the benefit with ongoing obligations. Qualifying entities must maintain documentation demonstrating their eligibility and provide information to the tax authorities on request. Because a breach removes the exemption from the start of the tax period, monitoring is not a formality — it is what protects the benefit. Robust records of ownership, activities, income use and recipient eligibility are the practical safeguard, and are best reviewed as part of a wider corporate tax compliance routine.
Frequently asked questions
Who qualifies for the sports entity corporate tax exemption in the UAE?
Three categories qualify under Cabinet Decision No. 1 of 2026: International Sports Entities (recognised governing bodies), Sports Entities wholly owned and controlled by them, and Ancillary Entities that provide administrative or operational support — each subject to five conditions.
When does Cabinet Decision No. 1 of 2026 take effect?
Cabinet Decision No. 1 of 2026 was issued on 12 January 2026 but applies retrospectively from 1 June 2023, the start of the UAE Corporate Tax regime, so eligible entities can align earlier tax periods with the exemption.
Can a sports entity earn commercial income and stay exempt?
Only activities directly linked to the entity's principal or sole objectives are permitted. Carrying on unrelated business activity puts the exemption at risk, because income must be used exclusively for the entity's core purpose.
What happens if a sports entity breaches the conditions?
The exemption is lost from the start of the relevant tax period, meaning the entity's full income for that period becomes subject to corporate tax. Ongoing documentation and monitoring are essential to keep the exemption intact.
How SBC Tax Consulting can help
SBC helps sports bodies and their entities assess eligibility under Cabinet Decision No. 1 of 2026, structure ownership and funding flows to satisfy the five conditions, and build the documentation needed to demonstrate and defend qualifying status. We also review earlier tax periods affected by the retrospective start date and support any tax authority queries that arise. To evaluate your position, contact our team.
This publication is for general information only and does not constitute professional advice. Please consult your SBC advisor before acting on any matter covered here.