An extraordinary article from the BBC web site says:
The BBC can reveal, for the first time, the full scale of the remarkable tax concessions that the world football authority Fifa demands of countries that wish to host a World Cup competition.
This Friday, 14 May, in Zurich in Switzerland, representatives of footballing countries around the world will submit their bids to host either the 2018 or 2022 tournaments.
The bidding nations have been asked to comply with a wide variety of conditions that Fifa has laid down - and which it would like to keep confidential.
Among them is that the entire event should be free of tax for Fifa.
"Any host country requires a comprehensive tax exemption to be given to Fifa and further parties involved in the hosting and staging of an event," said a Fifa spokesman.
This means that to be successful in its bid, the UK government must agree to forgo tens of millions of pounds in tax for the benefit of Fifa, which - as a charitable organisation - pays hardly any tax to its home country of Switzerland.
It also appears to mean that the tournament income of the players, some of whom are among the highest paid earners in the world, should also be exempt from tax.
This is extraordinary.
Take, for example, the case of South Africa. It has spent a fortune building facilities for the Wold Cup and it seems unlikely that FIFA will be allowing it any return at all.
This is straightforwardly abusive, and abusive in the private interests of an enormously wealthy elite.
Right around the world people should be profoundly disgusted at this abuse of developed and developing countries alike.
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We don’t always see eye to eye, I know. But I’m right with you on this one. If the tournament is to be run here, then it’s perfectly reasonable to expect that tax should be paid on the salaries of people working here, as we expect for any other person working in the UK.
It may be a measure of how little I care about football, but we should put our foot down. Let FIFA take the tournament elsewhere. We should have our principles, and on something like this we shouldn’t be prepared to waive them.
@FCAblog
Crikey
You feeling all right?
🙂
FIFA is an unbelievable corrupt organization run for the benefit of a few – Andrew Jennings excellent book FOUL! was mind-blowing.
Details of the exemption, and further analysis, are available here
http://taxjustice.blogspot.com/2010/05/footballs-fifa-and-african-tax-free.html
“Take, for example, the case of South Africa. It has spent a fortune building facilities for the Wold Cup and it seems unlikely that FIFA will be allowing it any return at all.”
C’mon Richard, this is really dumb.
No country hosting a major sporting should hope to see a return on its investment through direct tax revenues.
However, if the event is properly costed, it can generate huge returns, which can be direct (gate receipts, share of broadcasting rights), indirect (hospitality), and long term/incidental (improved infrastructure, prestige).
As for FIFA, if I understand correctly (and I am happy to be corrected on this), it is a non-profit organization whose purpose is to promote soccer globally. Much of its revenues is returned to national associations to be (at least in theory) invested in the grassroot development of the sport.
Why would it pay tax? How is it different from your various paying clients in the non-profit world, who do not pay a Dollar of tax and as a matter of fact are recipients of generous subsidies.
@Ted G
Dumb?
The only dumb thing would be to not tax:
a) Local profits from trading by FIFA limited companies
b) The players earnings in SA
c) All local broadcast profits
d) Image rights exprted
And on and on
And FIFA demands they all be tax free
And that the local state subsidies this exploitation
Yet another case of the state being captured for private gain, a process that sickens me.
[…] is outraged at news that FIFA has demanded tax free status as a precondition for any country wishing to host the 2018 World […]
[…] Ritchie and the Tax Justice Network are up in arms that FIFA (the soccer bods) demand that FIFA be free of tax. This is extraordinary. […]
“This is straightforwardly abusive, and abusive in the private interests of an enormously wealthy elite.”
Really? International organisation being tax free like….the World Bank, OECD, IMF, Olympics and even the European Union and European Parliament?
You will tell them all next time you visit, won’t you?
@Richard Murphy
The “dumb” was unnecessary, although others and myself have received far worse descriptives from you.
My assumption here is that FIFA is a non-profit organization (it might be stinkingly corrupt, but that is a separate matter), and therefore re-distributes all its revenues, after costs. Why would you want to treat any differently from any charity? the scale of FIFA’s revenue is massive (and shocking to me, because I simply don’t get the attraction of soccer as entertainment), but it does not change anything to the principle.
As per your other ideas:
OK, so I guess you would suggest taxing Greenpeace and/or Amnesty International as well?
That is a weird one: I agree players’ earnings should be taxed (are they earning anything, since they are playing for their national side?), but should that not be in their country of residence. Put it like this: if a professional is based in London and is sent for 1 month to South Africa on a non-recurring assignment, where should he/she be taxed?
I don’t know about the South African media market, but if it is like in the US, the profits will be taxed. Assume ESPN buys the rights and generates advertising revenues during broadcasts. The profit is taxable at the corporate rate. I suppose that the local equivalent of ESPN is no different.
I do not understand what you mean. The biggest benefitor of the event in terms of image (if it goes well) should be South Africa itself. Should the country tax itself, and if so, on what?
The real question is to what extent a government should underwrite this type of events. To me, it appears perfectly pointless to build massive new stadia if there is no commercial justification to do so. If a commercial rationale exists, private capital should be available. This would allow the South African government to allocate its resources to much more urgent priorities.
If there’s any justice in this world, this story should be on the Front pages of a major Sunday paper just before the World Cup starts. Thank God I’m not a footaball supporter. This really is disgusting. The article itself that NS has provided a link to shows what a rotten organisation FIFA is; in particular, it’s attempt to use our ridiculous libel laws to censor stories about it.
“British libel law is widely considered to be repugnant, particularly in the USA where, in fact, British libel judgments have been held unenforceable in at least two states because they were, literally, considered to be repugnant to each state’s public policy”
Well, good for the Americans and good for Offshore alert in standing up to FIFA’s lawyers.
is it only me that has seen the two big points Richard has adroitly avoided
1) any country trying to bring the World cup to their country knows about ths already, it is not sprung on them at the last minute.
The country knows they won’t recoup the funds spent through tax on FIFA and yet they still go ahead and try to bring the competetion to thier lands. Why leads to point 2
2) TOurism and increasing the profile of the country. All those spectators around the world flying into to SA, does FIFa get all that money or does it go into the local economy? The televied event to most of the worlds population is used for advertising the country to increase tourism for years to come.
SO please just answer me one question. Why if you beleive the hosting nation gets nothing from the WC does any nation attempt to host it?
Richard,
Agree with all of the above. One question, in the countries which host events such as the World Cup, exactly what body grants this tax-free status to FIFA?
Government.
Georges
@Tim Worstall
I know you’re a simple guy with a simple world view – but I thought even you could spot the difference between a parliament, and inter-government agency and a commercial operation
Apparently not
Looks like you need to go back to 101 to me Tim
@Ted G
Professional performers are usually subject to tax at source
Ditto profits
Royalties are subject to withholding
Branch operations to local profits taxes
All these you appear unaware of
All FIFA are asking to be waived
Time you learned some tax Ted
Richard, thank you for your “explanation”.
We have some involvement in agency and representation for professional athletes (tennis, track & field and motor racing). I believe that the regime of taxation at source applies in the UK, but it is far from being universal. I will revert if there is anything interesting.
Regarding FIFA, your entire argument is based on the idea that it is a commercial operation. Is it really?
“I know you’re a simple guy with a simple world view – but I thought even you could spot the difference between a parliament, and inter-government agency and a commercial operation.
1) FIFA is not a commercial operation. It is a charity.
2) There’s nothing odd about this at all:
http://www.hmrc.gov.uk/budget2006/bn12.pdf
“Who is likely to be affected?
1. The London Organising Committee of the Olympic Games Ltd (“LOCOG”,
the company set up to organise the Games), the International Olympic
Committee (“IOC”), and non-UK resident competitors and support staff
temporarily in the UK for the Games.
General description of the measure
2. These measures will exempt LOCOG from corporation tax and will provide
powers for regulations to be made in relation to the IOC and non-resident
athletes and other persons temporarily in the UK to carry out Olympicrelated
business. The powers will allow provision to be made to ensure
that the IOC’s revenues generated from the Games, income of non-UK
resident athletes from their performance at the Games, and income of
other persons temporarily in the UK to carry out Olympic-related business
will not be chargeable to corporation tax, income tax or capital gains tax.”
Tim
Charities don’t trade
They have trading subsidiaries that do
They’re taxable
And one abuse does not exonerate another
Richard