2023 World Cup: BCCI to lose $58-116m if Indian government denies ICC tax relief

The BCCI stands to lose between US$58 and US$116 million from its share of the ICC's central revenue pool due to the tax imposed by the Indian government on the international cricket body for hosting the 2023 Men's ODI World Cup. The marquee event will take place in India between October and November of next year.

"It should be noted that any tax cost incurred by the ICC for the 2023 event in India will be offset by the BCCI's share of ICC revenue," the BCCI said in an update sent to its state associations on Thursday. In a two-page document seen by the local media, the BCCI outlined the estimated financial hit it is likely to sustain if the ICC fails to secure a full tax exemption from the Indian government for staging the tournament in India, the first men's global cricket event in the country since the 2016 Twenty20 World Cup.

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Three men's events were awarded to India in 2014: the 2016 T20 World Cup, the 2018 Champions Trophy (later changed to the 2021 T20 World Cup, which was moved to the UAE and Oman), and the 2023 ODI World Cup. The BCCI was "required" by the agreement to assist the ICC (and all its commercial partners involved in the tournament) in obtaining the tax exemption.

The tax exemption has been a contentious issue whenever India has hosted a global cricket tournament. In 2016, the ICC deducted "nearly $23.5 million" from the central revenue pool, according to the BCCI's note, because the Indian government charged Star India*, which owns the rights to ICC events, 10.92% in taxes.

The BCCI has challenged the ICC regarding this matter before the ICC's disputes tribunal. The BCCI has initiated discussions with India's finance ministry to "deliver a tax exemption or tax solution" for the 2023 World Cup, even as it awaits a final decision from the tribunal.

Originally, the BCCI was expected to secure such an exemption 18 months before the event. It stated that it had asked the ICC to extend the deadline from April to May 31 this year. The original deadline was April.

"At the beginning of this fiscal year, the BCCI informed the ICC that, in accordance with the tax order for the 2016 event, it was anticipated that a 10% (excluding surcharges) tax order could be obtained as an interim measure for the 2023 event within the required time frame," the BCCI stated in its update. The Indian tax authorities have imposed a tax of 20% (excluding surcharges) on the ICC's broadcast revenue for the 2023 event.

The BCCI estimated the ICC's broadcasting revenue from next year's World Cup in India to be $533.29 million in its note. According to the BCCI, the "financial impact" of a 10.92% tax order would be approximately $58.23 million (the BCCI's note listed the figure as $52.23 million, which appears to be an error given the percentages listed), which would more than double to approximately $116.47 million if the tax component were to be 21.84%, as desired by the Indian government.

This amount, whatever it ends up being, will be deducted from the BCCI's share of the ICC's central revenue pool, which over the current rights cycle (2016-2023) amounts to approximately $405 million based on the ICC's estimated overall earnings for the period of $2.7 billion.

The BCCI stated that it remains "optimistic" that a resolution will be reached as it is negotiating with the "highest level" of the Indian government. "The BCCI is currently working with the Ministry of Finance, Government of India, and has argued against this 20% (excluding surcharges) tax order at the highest level. They are optimistic that a 10% (excluding surcharges) tax order will be issued in the near future."