PSL Franchises Seek Tax Exemptions After Massive Losses in First Two Seasons

The franchises of Pakistan Super League are asking for tax exemptions from the government citing losses they incurred in the first two editions of the event.

The PSL franchises have also called for a financial restructuring of the league to make it profitable for them.

As per their claims, the franchises incurred losses ranging from Rs. 200 million to Rs. 700 million each in the first two seasons of the league.

According to a report, PCB has sent a letter to Punjab finance minister, which contains consolidated financial details of the five franchises from the 2016 and 2017 seasons.

PCB also sent the letter to all franchises by mistake, which disclosed the financial details of each franchise to others.

The PSL franchises have been raising questions over the amount of tax they had to pay.

As per the letter, Lahore Qalandars have incurred the largest losses, over Rs 310 million in 2016 and over Rs. 420 million in 2017.

Quetta Gladiators have suffered over Rs 46 million in 2016 and over Rs. 63 million in 2017.

Karachi Kings have incurred losses of over Rs 117 million in 2016 and Rs 60 million in 2017.

Islamabad United suffered over Rs 184 million in 2016 and over Rs 241 million in 2017.

The 2017 champions, Peshawar Zalmi, incurred a loss of over Rs. 237 million in 2016. However, Zalmi's losses came down drastically in 2017 to just over Rs 20 million.

The franchises have also raised questions over the payment of the annual franchise fee to PCB in US dollars, as the Pakistani rupee has depreciated against the dollar in the recent months.

The owner of Multan's Franchise, who pulled out after its first season, is reported to have argued that rupee's continuous fall against the dollar made it unfeasible for them.

The franchises also have concerns over the high taxes they had to pay to the government. The letter said the franchise fees made up 30% to 91% of a franchise's total costs in 2016 and 2017.

In addition to the above, the Federal Government's withholding tax currently chargeable at 10% of the franchise fee is also levied by the PCB and deposited with the Federal Board of Revenue. The amount of franchise fee plus taxes adds to the financial hardships of the franchisee who in addition to these, also incur costs of players' match fees, logistics etc in the UAE and Pakistan. Thus it adds to their financial burden since they are incurring heavy losses, the letter said.

The PCB argued:

Once the league moves back to Pakistan properly then not only will the franchises be able to move towards breaking even (because of lower costs), but it will also generate higher economic activity in the country.

Until then, the PCB has sought the provincial government to provide tax relief to the franchises, sponsors and rights holders for a period of five years.

Source: Pro Pakistan