The Board for Control of Cricket in India (BCCI) could be liable for a massive tax bill if the Indian government declines to grant full or even partial tax exemption for staging the ICC T20 World Cup in the country in 2021.
With the World Cup just 10 months away, the International Cricket Council (ICC) has earmarked the United Arab Emirates (UAE) as a backup venue to host the seventh edition of the tournament. The Board of Control for Cricket in India (BCCI) has already missed a couple of deadlines — December 31, 2019, and December 31, 2020 — and now the pressure mounts on it to decide quickly if it wants to host the prestigious tournament. An official said that the new and revised deadline is in February.
An application from the BCCI, seeking full tax exemption for the 2021 T20 World Cup, was submitted some time ago, but the Narendra Modi-led government is yet to take a final decision on the request. Interestingly, the BCCI is not even a recognised national sports federation by the sports ministry.
Having missed its two previous deadlines, the ICC has given two final options to the BCCI. First: the T20 World Cup is relocated to the United Arab Emirates (UAE), and second: it provides an undertaking that if it fails to get the exemption then it will have to meet the tax liabilities, which could be a minimum of Rs 226.58 crore (US$ 2.512m) and a high of Rs 906.33 crore (US$ 10.027m).
When 50-over World Cup was held in India in 2011, the Manmohan Singh-led government sat on the application from the BCCI for an inordinately long time, before the then Prime Minister himself intervened and granted it at the last minute.
For the 2016 T20 World Cup, staged in India, the Modi government had granted only 10 per cent tax exemption. Because the government had not granted full tax exemption, the ICC has withheld $23.75 million from the share that the BCCI was entitled to receive from the game’s world governing body. This issue, the BCCI insists, is still alive and unresolved.
At the December 24 AGM, the BCCI office-bearers discussed this issue with the general body that comprises its affiliated state associations. But, according to one official who attended the meeting in Ahmedabad, the house looked divided over whether the world’s wealthiest cricket board should pay the tax, if the government doesn’t grant full tax exemption.
The tax issue has arisen because the ICC’s media rights holder, STAR India, is based in India and the broadcaster pays ICC the money. If the Indian government doesn’t grant tax exemption to STAR India, the premier broadcaster will not pay the entire amount promised to the ICC. And if the ICC doesn’t receive the entire amount from STAR India, the member countries of the ICC will receive less as their share from the world body’s distributions.
Separately, when the ICC allots its tournaments to its member countries, the two parties — ICC and tournament hosting country — sign a host agreement that binds the host to secure full tax exemption. The ICC gives a certain amount to the host country while each match staging association – in BCCI’s case, its affiliated state associations — gets a fixed sum for organising a match. The gate money that is accrued from hosting matches goes to the match hosting association. There are many other conditions besides this.
On July 6 last year, the Supreme Court-appointed Committee of Administrators (CoA), which was administering the BCCI at the time, had discussed the $23.75 million withheld by the ICC in a meeting. The CoA noted: “…since the agreement between the BCCI and the ICC in relation to the hosting of the ICC T20 World Cup 2016 is governed by English law, the opinion of an English firm should be obtained and the further course of action would be determined based on the said opinion”.
Three months after that meeting, Sourav Ganguly took charge of the BCCI as president, Shah as secretary, and Dhumal as treasurer at the elections held on October 23. The issue of the income tax exemption for the 2021 T20 World Cup and the 50-over World Cup in 2023 was already on the table. But little forward movement seems to have been made since October last year.
John Stephenson
john@cricketinvestor.co.uk
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