AE Introduces Corporate Tax Exemption for Sports Entities — Feb 2026

 


Key Policy Update

The UAE government has enacted Cabinet Decision No. (1) of 2026, issued under Federal Decree-Law No. 47 of 2022 (the Corporate Tax Law), which grants a full exemption from corporate tax to qualifying non-commercial sports organizations. This marks a significant fiscal and regulatory shift aimed at bolstering the national sports ecosystem and attracting international sporting bodies to operate in the country.

Objective & Strategic Rationale

  • Primary aim: Support sustainable development of the UAE’s sports sector and align with global best practices.

  • Economic strategy: Enhance contribution of sports organizations to the UAE’s broader economic diversification goals and strengthen the Emirates’ position as a global sports hub.

  • Mobility impact: Eases operational and labour cost structures, potentially improving athlete and administrative talent mobility.

Who Qualifies for the Exemption

To benefit from the tax exemption, entities must satisfy the following strict eligibility criteria:

  1. Entity Type

    • International sports organizations

    • Domestic sports bodies recognized regionally or internationally

    • Supporting ancillary entities tied to a primary sports entity

  2. Operational Basis

    • Operate strictly on a non-commercial basis (i.e., no unrelated business activities)

    • All income and assets must be used exclusively for core sporting objectives or necessary related expenses

    • No distribution of income to members, shareholders or founders except in narrow, government-approved contexts (e.g., public benefit entities)

  3. Recognition & Oversight

    • Must be formally recognized by the Ministry of Sports or a competent sports authority

    • Applicants must submit documentation and data to the Federal Tax Authority (FTA) to verify compliance and eligibility

Compliance and Governance Conditions

To safeguard against misuse of the exemption:

  • Entities are prohibited from commercial activities outside their core sports mission.

  • Financial records and documentation must demonstrate non-profit use of funds and assets.

  • The FTA will monitor ongoing compliance; loss of eligibility could be triggered if conditions are breached mid-year.


Practical Implications for Corporate and Tax Teams

Short-Term Actions

  • Assess eligibility: Undertake a rapid audit of existing sports-related organizations within your structure for qualification potential.

  • Prepare applications: Gather governance documents, financial statements, recognition letters, and operational plans for submission to the FTA.

Ongoing Compliance

  • Establish internal controls to ensure that income use, asset deployment, and strategic activities remain within authorized non-commercial parameters.

  • Track regulatory updates from the Ministry of Finance and FTA in case of evolving technical guidance.

Strategic Planning

  • Consider the UAE as a regional headquarters base for international federations, leveraging the tax exemption to reduce cost structures and improve investment appeal.

  • Align with broader commercial strategies — for example, sports tourism, sponsorship and event hosting — while maintaining compliance with non-profit definitions.

High-Level Takeaways

✔ This is not a blanket tax break — it’s a structured, compliance-driven exemption anchored in strict operational criteria.
✔ Eligibility depends on documented non-commercial purpose, recognition by sports authorities, and use-of-income restrictions.
✔ The FTA will oversee and enforce compliance and may revoke exemptions for entities that no longer qualify mid-reporting period.
✔ Strategic positioning as a sports hub continues to be a national priority for economic diversification in the UAE. 

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