The other FIFA scandal: poor countries and the tax-free bubble

And well should these Brazilians complain

Brazilians have good reason to complain

We’ve just written about the role of Goldman Sachs in distorting U.S. sports and harming smaller players via tax cheating. Well, here is yet another thing to make you choke on your cornflakes: FIFA hurting poor countries though what we’d describe as aggressive, idiosyncratic tax cheating.

We described it as FIFA and the African tax-free bubble at the time:

“This is South Africa’s Revenue Laws Amendment Act 20 of 2006, which football’s super-wealthy governing body FIFA demanded as a price for allowing South Africa to host the World Cup.”

Although FIFA is technically a non-profit group, it is a monopoly (there is, after all, only one world cup) and this allows it to extract, in economic terms, super-normal profits (or surplus) via its sponsors.

In Africa, what were the terms of this bubble? Well, as we wrote about the sordid issue in 2010, the relevant South African legislation states:

“The Act creates a “tax-free bubble” around FIFA-designated sites so that profits on consumable and semi-durable goods sold within these areas will not be subject to income tax; neither will VAT be applied.”

And what are these sites? Well, they spell out”

  • the ten World Cup stadiums
  • any FIFA-designated exclusion zone
  • any official tournament parking area
  • press and television centres set up for the tournament (including the International Broadcast Centre)
  • certain training sites during official FIFA-sanctioned training days at those sites
  • official host city public viewing venues (also known as fan parks)
  • certain areas for VIPs
  • any other area or facility utilised for official 2010 events as agreed in good faith between FIFA and SARS

Why on earth would South Africa provide such a massive subsidy to such a wealthy global multinational non-profit (whose $200 million headquarters sits in a plush Zurich neighbourhood)? Well, the South African legislation continues, almost apologising for the fact that it is being forced to its knees and beg:

“This “tax bubble”, a condition for the hosting of the tournament, is something all World Cup host countries must provide. It means that FIFA, FIFA subsidiaries and the participating national associations (excluding SAFA) will – when it comes to VAT on goods and services directly relating to the tournament – be treated as diplomatic missions are treated.”

Choking on your cornflakes yet? Well, now try the Brazilian version.

Quite rightly, the world is focusing on the latest FIFA corruption scandals. But let’s also never forget this one either. It’s not as current, but perhaps just as rotten.

Endnote 1: Craven FIFA Sponsor of the Year Award goes to Adidas, which has guzzled eagerly (like many other FIFA sponsors) from the proceeds of FIFA’s corruption and tax cheating. Check out this pathetic quote:

“Following today’s news, we can therefore only encourage FIFA to continue to establish and follow transparent compliance standards in everything they do.”

Our emphasis added.

Endnote 2: if it’s sports and tax justice you’re interested in, do follow the TJN-supported project The Offshore Game.

 


Related Posts

Launch of international research collaboration, #AltAusterity

alt austerityToday is the launch of #AltAusterity, a new, international research collaboration of which Tax Justice Network is a partner.  The project aims to stimulate public debate on the subject of austerity though high quality research. It is a response to the lack of evidence which has underpinned the current policy agenda on austerity. The project […]

READ MORE →

RB tax avoidance – company calls for public country by country reporting after Oxfam report reveals profit shifting

pictureOxfam has today released a report on tax dodging by RB, the company formerly known as Reckitt Benckiser and the maker of thousands of well known household products. The report looks at the 2012 restructuring of the company which saw it set up ‘hubs’ in the Netherlands, Dubai and Singapore, all well known corporate tax […]

READ MORE →

Half measures mean Mauritius will continue to be a tax haven for the developing world

MauritiusThere was news this week that Mauritius has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). This is an initiative from the OECD to allow countries to take measures designed to stop tax avoidance by multinational companies and put them into their existing network of […]

READ MORE →

G20: Pressure rising on tax haven USA

HamburgWhilst the eyes of the world focused on the isolation of the US from the ‘G19’ position on climate change, something remarkable played out elsewhere in the process. Following closely the common EU position that we highlighted a few days ago, the G20 communique devotes important space to tax justice. It’s so good we quote […]

READ MORE →

Will the G20 ever end the global problem of tax avoidance and tax evasion?

HamburgAhead of the G20 Summit in Hamburg this week our own George Turner has published this op-ed in the German newspaper Die Tageszeitung today. The article discusses why, despite sustained political engagement from world leaders, we are still some way from solving the problem of tax avoidance and tax evasion. Here’s an English translation of the article:

READ MORE →

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top