IPL 2020 : New VAT laws in UAE can stump IPL 2020 stakeholders, IPL players salaries can also be taxed

The Indian Premier League (IPL 2020) stakeholders are likely to get stumped by the new taxation laws in the United Arab Emirates (UAE). The player’s and franchisees’ earnings in UAE can be taxed as per the new taxation norms in the Middle East nation. As per the new Value, Added Tax Laws introduced in the year 2018 in UAE, any service provided in the nation is taxed. Under these norms, all player earnings in UAE are bound to be taxed.

In IPL 2014, when 20 of the matches were played in UAE, no such tax law existed. But as per the new taxation structures, players’ salaries are bound to come under VAT TAX in UAE according to the experts.

“As per the new taxation norms in UAE, VAT will be levied on the IPL player salaries as they are providing services to the franchises”, said one of the representative of Shuraa Tax Consultants based out of UAE.

What is VAT Tax in UAE ? Will IPL Player Salaries be taxed in UAE ?
VAT is a tax on the supply of goods/services for consideration by a person conducting business in the UAE. The IPL model of franchisees and players’ auction indicates that consideration (fee/value) is indeed present between the parties.

As per the VAT laws, the place of supply of any sporting service – or any similar services – shall be where such services are performed. European tax jurisprudence on a similar question supports the conclusion that the ‘place of supply’ of sporting services will be the UAE.

Accordingly, the IPL players are apparently obligated for VAT compliance for the current IPL season. A critical element would be to apportion the total contract fee between the sporting service and other services performed by players for their franchisees during the season.

IPL 2020 : Franchises, players completely clueless about such taxation

InsideSport reached out to few franchises to check if they are aware of any such taxation in UAE. But everyone was completely clueless about the new tax structure in UAE.

“We don’t have any idea about any such taxation. No one has informed us about it. So as of now there will be no deduction in players’ salary”, said KXIP CFO LC Gupta.

InsideSport also tried reaching out to BCCI officials in UAE on the matter. Despite repeated attempts to connect with them on the matter, we did not get any reply from the board officials present in Dubai currently.

It is not only the player salaries that come under the tax purview according to the taxation experts in UAE but also the earnings of the franchisees may also need to independently review their VAT exposure for various sponsorships, endorsements, and other services supplied during the IPL season.

InsideSport could not verify, whether BCCI has got into some understanding with the local authorities on possible tax exemptions for all matters related to IPL 2020 in UAE or not. According to the local tax experts, if sovereign exemptions have been granted to IPL 2020, they will be tax-free in the country, if not – the earnings and services will be taxed in UAE as per the new laws.