IPL 2020 : New VAT laws in UAE might put tax burden on player’s salaries

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

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

“As per the new taxation norms in UAE, VAT is going to be levied on the IPL player salaries as they’re providing services to the franchises”, said one among 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 may be a tax on the availability of goods/services for consideration by an individual conducting business within the UAE. The IPL model of franchisees and players’ auction indicates that consideration (fee/value) is indeed present between the parties.

According to the laws imposed by VAT, it is essential that the place of supply of any sporting service – or any similar services – shall be where such services are performed. European tax jurisprudence on an identical question supports the conclusion that the ‘place of supply’ of sporting services are going to be the UAE.

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

IPL 2020: Franchises, players completely clueless about such taxation

InsideSport reached bent few franchises to see if they’re conscious 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. nobody has informed us about it. So as of now, there’ll be no deduction in players’ salary”, said KXIP CFO LC Gupta.

InsideSport also tried reaching bent BCCI officials in UAE on the matter. Despite repeated attempts to attach with them on the matter, we didn’t get any reply from the board officials present in Dubai currently.

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

InsideSport couldn’t verify, whether BCCI possesses into some understanding with the local authorities on possible tax exemptions for all matters associated with IPL 2020 in UAE or not. consistent with the local tax experts, if sovereign exemptions are granted to IPL 2020, they’re going to be tax-free within the country, if not – the earnings and services are going to be taxed in UAE as per the new laws.