India could potentially lose out on hosting two of the biggest global tournaments - the 2021 Champions Trophy and the 2023 World Cup - in the next five years because of an ongoing tax issue. The BCCI is not at fault; instead it is the Indian government's stance of not approving a tax exemption to the ICC that has given rise to the global governing body's "concerns". Fearing revenue losses of at least $100 million, on Friday, the ICC board directed its management to look out for alternative venues, beginning with the Champions Trophy, if the issue is not resolved.
Although the Champions Trophy is still three years away, the ICC board has been stung by the experiences of the 2016 World T20 (hosted by India), for which tax exemption has not yet been approved. Because of that, the ICC has suffered a revenue shortfall of $20-30 million - in 2016, it is understood Star India, which owns the media rights for ICC events, paid 10% tax to the Indian government and recovered that amount by deducting from its payment to the ICC. Two years on, and despite constant reminders by the ICC and the BCCI, the Indian government has not budged in providing those exemptions.
Despite the BCCI's attempts at facilitation, the ICC board remains wary of exposing itself to what some officials calculate could be losses of $100-125 million if the Indian government fails to provide tax exemption for the Champions Trophy and the 2023 World Cup.
That hits Full Members the hardest, because revenue from ICC events is distributed among all participating countries. "The Board expressed their concern around the absence of a tax exemption from the Indian Government for ICC events held in India despite ongoing efforts from both the ICC and BCCI to secure the exemption which is standard practice for major sporting events around the world," the ICC said in a media release, after the board meeting in Dubai on Friday.
"The Board agreed that ICC management, supported by the BCCI will continue the dialogue with the Indian Government but in the meantime directed ICC management to explore alternative host countries in a similar time zone for the ICC Champions Trophy 2021."
ICC's chief executive officer, David Richardson, and management have been asked to explore alternative venues in the same time zone as India - which brings Sri Lanka and Bangladesh into the picture. But that decision is still some time away - any alternative venue will only be finalised in the next 12-16 months. A final decision on whether India will host the Champions Trophy will be taken by the end of 2019.
Friday's meeting was attended by BCCI's acting secretary Amitabh Choudhary, who is understood to have supported the ICC's position. ESPNcricinfo understands, in its communication with the Indian government, the ICC has highlighted the fact that when countries host global sporting events like the Olympics, football's World Cup, the World Athletics Championships and even the UEFA Champions League final, they are given special dispensation because of the positive impact they have on the local economy.
The current impasse is new - in the last decade alone, the Indian government allowed tax exemptions for the 2006 Champions Trophy as well as the 2011 World Cup. For the former event, an ICC delegation, which included Ehsan Mani and the late Jagmohan Dalmiya, directly negotiated an exemption with the Indian government. On the basis of that negotiation, the government passed a legislation in the tax act which allowed, for instance, the Commonwealth Games of 2010 held in Delhi to also be tax-exempted, as well as other international sporting events.
In that time, the ICC's hosting agreements required the host board to compensate whatever revenue was lost if exemptions weren't secured. New hosting agreements, in place post 2015, are not believed to be as explicit in that requirement, instead requiring the host board to resolve the issue to the best of its endeavour.
With additional inputs by Osman Samiuddin