Corporate tax exemption for qualifying sports entities and related organizations

With the aim of supporting the sustainable development of the sports ecosystem and strengthening its position as a global sports hub, the UAE has issued Cabinet Decision No. 1 of 2026. This decision clarifies the conditions and procedures for corporate tax (CT) exemption available to qualifying sports entities and related organizations and is applicable for tax periods commencing on or after 1 June 2023.

Based on the decision, certain sports entities will be exempt from CT upon meeting certain conditions.

The key aspects covered under the decision are highlighted below:

_{[1] https://uaelegislation.gov.ae/en/legislations/1956/download}

To qualify for exemption, an entity (International Sports Entity, Sports Entity, or Ancillary Entity) must meet the following conditions:

a) The entity must undertake business activities that are directly related to achieving its sole objectives.

b) Its income and assets must be used exclusively to further those objectives.

c) The entity’s income and assets must not be used for the personal benefit of its shareholder, member, trustee, founder or settlor except in the case of qualifying public benefit entities, government and government-controlled entities, other sports entities.

The decision also allows for additional conditions to be introduced in the future. Entities should therefore monitor further developments.

Qualifying entities would be required to obtain a CT registration and then make an exemption application to the Federal Tax Authority (FTA).

• The application must be filed within 60 business days from the end of the tax period in which the entity meets the exemption conditions.
• Given the recent issuance of the decision, this deadline may warrant relaxation for tax periods ending on or before 31 December 2025.
• Once approved, the exemption will take effect from the start of the tax period specified in the application.

Exempt persons are not required to file a CT Return. Instead, the exempt persons are required to submit an annual declaration to the FTA within nine months from the end of the relevant tax period confirming continued eligibility and accuracy of records.

Entities must maintain sufficient records to demonstrate compliance with the exemption conditions and be able to provide supporting documentation to the FTA upon request. Such records must be retained for seven years following the end of the relevant tax period.

An entity that fails to meet the exemption conditions will cease to be treated as an exempt person from the start of the relevant tax period. Exceptions may apply where the failure arises due to liquidation or termination, or where it is temporary, promptly rectified, and supported by appropriate compliance procedures.

This decision provides qualifying sports entities and related organizations with an opportunity to benefit from corporate tax exemption.  The decision is dated 12 January 2026 and applies retrospectively from 1 June 2023, i.e., it aligns with the commencement of the UAE corporate tax regime.

Eligible entities should assess that 1) their activities are limited to principal sporting objectives and permitted ancillary functions; and 2) their funds are applied exclusively toward approved objectives and do not create private benefit.

Once an exemption is obtained, the entity must establish internal governance processes to maintain continuous eligibility including proper documentation.

If you need assistance, please reach out to your advisors at KPMG or the contacts mentioned below.