The ICC has given the Board of Control for Cricket in India (BCCI) twelve months to get tax exemptions from the Central Government in order to host two high-profile World competitions in India in 2021 and 2023.
The ICC Chief Executive, David Richardson, informed the BCCI two months ago that if it does not get the tax exemptions for the ICC events to be held in India (men’s and women’s T20 World Cup in 2021 and the ICC Cricket World Cup in 2023) by December 31, 2019, the two competitions may be moved to another country “in order to avoid any adverse tax risks associated with those events.”
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CoA, BCCI aware
The Committee of Administrators (CoA), BCCI office-bearers and the professional managers of the board are aware that they have a year's time to get the exemptions from the Central and State governments.
The Central Government, especially the then Prime Minister, Manmohan Singh, made a special case and provided tax exemptions for the ICC Cricket World Cup 2011 held in India, but the BJP government, which came to power in 2014 has not extended any such concessions to the BCCI.
Richardson has emphatically stated that the “December 31, 2019 deadline” has been set because the BCCI has been unable to get tax exemption for the ICC World T20 2016.
Over the last two and half years, the BCCI has given assurances to the ICC that it would be able to provide tax exemptions for the ICC World T20 2016.
BCCI and ICC officials have even met the Union Finance Minister, Arun Jaitley, in this regard. But in the absence of any real development on this count, the ICC, following a request from the BCCI, set a deadline of December 31, 2018, failing which it would deduct $23.75 million from its “future distributions of the ICC’s surplus.”
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The big sum of $ 23.75 million has been deposited by Star India (being an Indian company) with the Indian tax authorities.
Richardson, in a note, has said: “In 2014, the BCCI and IBC (ICC Business Corporation, the ICC’s Commercial arm) entered into a Host Agreement pursuant to which the event (ICC World T20 2016) would be staged in India and under which the BCCI undertook to provide not later than 18 months prior to the commencement of the event, a ‘tax solution’ that resulted (among other things) Star not withholding any of the revenues payable under the Media Rights Agreement (MRA) relating to any ICC Event, including the Event.
"The ICC Board has noted that the BCCI did not and has thus far been unable to comply with that obligation and that the ICC has still not received a refund or applicable tax exemption with respect to the $23.75 million more than two years after the event concluded.”
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It’s understood that the Central Government has been persuaded to provide tax exemptions because the two events in 2021 and 2023 each are likely to earn in excess of ₹1000 crores.
The BCCI and the CoA have also received proof of tax exemptions given by the Cricket Boards of Australia, Sri Lanka, Bangladesh and from England, a tax structure set up in concert with the host to ensure that no tax exposure will arise based on expert tax advice.
A BCCI official said: “The $23.75 million belongs to the ICC and its members. Why should they lose it?”