London Olympics: A Tax Haven Within a Tax Haven
that for a few short weeks in July and August, Stratford, in east London, will become a tax haven. Millions upon millions of profits made by multinational companies with monopoly rights to exploit the 2012 Olympics will flow direct into the pockets of shareholders and CEOs without a penny being refunded to the British taxpayers who paid for the event. How did this happen? Well, according to Ethical Consumer
this has become normal practice:
"The sad fact is that enacting tax avoidance legislation has now
become a criteria for hosting international competitions such as the
Olympics. Big name athletes such as Usain Bolt (along with the organisers) have
applied pressure to potential host nations to ensure that winnings (and
profits) are not taxed."
If this sounds familiar, it's because we witnessed exactly the same rip-off around the 2010 World Cup. As we reported in May 2010
, FIFA managed to strong-arm the South African government into creating a tax-free bubble around the entire World Cup event, which meant that the financial benefits of the World Cup flowed out to the corporate sponsors, with little or no lasting benefit to the South African economy. Granting tax haven status to major sporting events appears to have become the norm, reflecting the power that big sport is able to exert over politicians. As Ethical Consumer
"Without these tax sweeteners the IOC would simply take their
corporate circus elsewhere and so begins a race to the bottom in a
bidding process that echoes the offshore system. New tax rules ushered
in as part of the winning Team GB bid include ‘a temporary exemption
from UK Corporation Tax and UK Income Tax for certain non-resident
Companies like Visa, with a monopoly on payments for the 2012 Olympics, and McDonalds, which will be operating its largest outlet in the world at the Olympic village, stand to make a tax-free fortune. According to the ever accommodating British tax authority, Her Majesty's Revenue and Customs:
“For the purpose of this exemption a London 2012 Partner is an
organisation (known as a Commercial Delivery Partner) that is supplying
services to LOCOG in return for the right to market and advertise
themselves or their products for commercial purposes by reference to
their association with the Games. It includes a company connected with
the Commercial Delivery Partner.”
Winning athletes will also be exempt from tax on their earnings.
All of which is music to the ears of the International Olympic Committee (IOC) which, like FIFA, is Swiss-based and therefore enjoys low taxes on its worldwide profits in addition to the tax-free bubble it managed to negotiate for itself around the 2012 event.
But the real winners of the 2012 Olympics are the corporate sponsors. While the mega-event is unlikely to provide a lasting legacy in the form of a healthier and fitter society, or a useful boost to the UK economy, 'commercial delivery partners' will be making tax-free killings. Trebles all round in the director's enclosure.
You can read the full Ethical Consumer