Authors: Ashish Athavale
Nidhi Kamdar
Tyrone Felizardo
In February 2026, the UAE has issued Cabinet Decision No. 1 of 2026, introducing a Corporate Tax (CT) exemption regime for eligible sports entities. The Decision is dated 12 January 2026 and applies retrospectively from 1 June 2023, ensuring full alignment with the commencement of the UAE Corporate Tax regime.
While a similar exemption is already available to Qualifying Public Benefit Entities (QPBE) under which certain sports associations have previously been listed, this Cabinet Decision provides a more specific framework for the CT exemption applicable to eligible sports organizations.
The framework supports the UAE’s commitment to develop a world‑class sports ecosystem and ensures that tax exemptions apply only to genuine, non‑commercial sports bodies or organizations that actively promote and development of sports at the international, regional, and national levels.
Entities Covered By The Exemption
- International Sports Entity
- Sports Entity
- Ancillary Entity
A wholly owned entity established solely to perform administrative or operational activities for an International Sports Entity or its Sports Entities.
Key Conditions For Corporate Tax Exemption
To qualify for Corporate Tax exemption under Article 4 of the UAE CT Law, an International Sports Entity, Sports Entity, or Ancillary Entity must meet all the following conditions:
1. Allowed Activities
The entity must conduct only those activities directly related to achieving its principal or sole objectives. Any commercial or revenue‑generating activity not aligned with its purpose may result in loss of the benefit of exemption.
2. Exclusive Use of Income and Assets
All income and assets must be used exclusively for:
- conducting its principal or sole objectives, or
- payment of necessary and reasonable expenses.
The entity’s income or assets must not benefit any shareholder, member, trustee, founder, or settlor, unless they are:
- Qualifying Public Benefit Entity
- Government Entity,
- Government‑Controlled Entity,
- Other sports entities listed in the Decision.
4. Additional Conditions
The entity must comply with any additional conditions set by the Minister, thereby retaining flexibility for the introduction of further requirements as necessary.
Exemption Application And Compliance Requirements
Eligible sports entities must register for Corporate Tax with the Federal Tax Authority (FTA) and apply for exemption within 60 business days from the end of the tax period in which they first meet the exemption conditions. Once approved, the exemption applies from the start of the relevant tax period.
Exempt entities are not required to file a Corporate Tax Return but must submit an annual declaration within nine months from the end of the relevant tax period confirming continued compliance.
Entities must maintain adequate records for seven years, and failure to provide supporting documents upon request by the FTA may result in loss of benefit of the exemption.
Lossing The Benefit Of Exemption
Corporate Tax Exemption may be revoked from the start of the relevant tax period if the entity:
- no longer meets the exemption condition,
- carries out non‑permitted commercial activities, or
- allows its income or assets to benefit non‑qualifying person.
However, exceptions may apply where the breach is temporary and promptly rectified, or due to liquidation or closure, subject to the conditions set out in the Cabinet Decision.
BDO Insights
The recently issued Cabinet Decision introduces a rigorous CT exemption framework for sectors where commercial revenue and public-interest governance intersect.
To obtain and retain exempt status, eligible sport entities must ensure that their governance, ownership, and operations align with non-commercial requirements, and that revenue streams support their principal or sole objectives. Financial records must prove that no funds provide private benefit and that all expenses are reasonable and necessary.
In addition, eligible sports entities should maintain documentation readily available for FTA verification, including registration documents, financial statements, and details of activities undertaken. Given the ongoing nature of the exemption conditions, it would be prudent for the entities to periodically evaluate their compliance with the relevant requirements to ensure that the exemption status is maintained.
Importantly, as the Cabinet Decision applies retrospectively from 1 June 2023, eligible sports entities can apply for the exemption on a retrospective basis. Where exemption was not applicable for prior periods, the entities can make an application to FTA to be treated as an Exempt Person on retrospective basis and once approved the previously filed CT returns would need to be revised via Voluntary Disclosure and consider seeking a refund or adjustment of any tax paid, subject to the relevant FTA procedures and guidance.
How BDO can assist:
- Retrospective compliance review - As Cabinet Decision applies retrospectively from 1 June 2023, assist in revisiting prior CT registration and CT return filings, and support any required corrections or amendments to past compliance obligations.
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Exemption Eligibility Assessments - Evaluate whether the sports entity meets the conditions to qualify for CT exemption under the Cabinet Decision.
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Registration and Exemption Application Support - Assist with reviewing CT registration requirements and, where applicable, assist in preparing the exemption application to the FTA.
- Structuring and Governance Review – Assess governance arrangements, ownership structure, and operational activities to ensure alignment with the exemption conditions.
- End-to-End Compliance Support – Provide support with CT compliance requirements, including maintaining appropriate documentation and ensuring readiness for potential FTA review.