Do the provisions of VAT apply in the staging of international events? And what of the players themselves? Image Credit: Gulf News Archive

... It should be noted that the purpose of the provisions of the VAT Directive - which determines the place where services are deemed to be supplied - is to avoid, first, conflicts of jurisdiction which may result in double taxation, and, secondly, non-taxation…

The reaffirmation of the above global principle by the European Court of Justice (ECJ) couldn’t be more apt for the UAE’s VAT regime. The place-of-supply (POS) rules should not only avoid double taxation… but also double non-taxation.

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Is there such a concept?

Unlike a single team alone becoming the eventual IPL winner in about a week, it would be intriguing if all the players could at least avoid VAT obligations in the UAE and in their home countries.

The players have a legitimate claim under the VAT/GST laws of India and/or their home countries that VAT is not payable in the respective countries. In any case, VAT payment in any other country could not be an excuse to avoid the UAE’s VAT if the tax is applicable.

Considering the relentless pursuit by the Indian tax authorities in the famous $3 billion Vodafone case, it is not in doubt that countries want companies, whether local or foreign, to respect their tax laws.

A 'fixed establishment'

A critical piece in solving the VAT puzzle is to determine the ‘fixed establishment’ of IPL players. It means any fixed place of business in which a person conducts his business regularly, and where sufficient human and technology resources exist to enable the person to supply services.

Conceptually, a person can have multiple fixed establishments in different countries each having its own VAT obligations. The IPL players are physically present in the UAE to play the entire IPL season and earning corresponding match fees. Accordingly, the element of regularity and presence of human/technical resources is apparently satisfied.

In any case, a non-resident supplier is obligated to register, even if the non-resident does not have a place of establishment or fixed establishment in the UAE. Similarly, other transactions between different IPL stakeholders and the franchisees could also entail VAT exposures.

Pleading ignorance 

A non-resident individual or company often claims that they were not aware of the laws of the host country. ‘Ignorance of law is no excuse’ is another global principle to counter such claims.

UAE companies and residents could also claim ignorance to avoid tax penalties, but such a claim only invites a Dh10,000 penalty imposed for delayed deregistration, even though such delays did not cause any loss of tax revenues.

As much as a non-resident is expected to be aware of the traffic and other civil laws of a host country, they should be aware of the tax laws when visiting the country in a professional capacity. The foreign players should not expect to be treated any different under the tax laws.

Option for VAT exemptions?

Another moot issue is a possible VAT exemption to IPL stakeholders. Though it would certainly be a policy decision to grant such an exemption, VAT laws apparently do not have a scope to expand the VAT exemptions without amending the Decree Law itself.

Granting an exemption could also result in opening the floodgates for similar requests from other artists, actors, performers and players.


The recent public clarification on “VAT-free” special offers demonstrates Federal Tax Authority's efforts to provide clarity for the benefit of the tax payers at large. And clarity regarding the IPL players will immensely benefit the sporting industry, apart from the tax payer community.

Pankaj S. Jain is founder of AskPankaj, a consultancy.