Taxes in Sports, FIFA made $2.5 billion tax free from World Cup
The news that Usain Bolt will not be running in the UK this August because of a strange tax in the country is a shocking affair. Taxation systems the world over are pretty odd when it comes to athletes and sports stars. They have these same sorts of taxation laws in America as they do in the UK, and it is very sad to think that fans of athletes can actually miss out on seeing their favourite stars because of these odd tax laws.
Usain Bolt was meant to run this August in the Diamond League event in London. But he pulled out citing the hefty taxes that he would have to pay if he competed there. The rules at the moment state that an athlete visiting the country to compete in an event will face a 50% tax bill on their earnings for that particular event and also a proportion of their worldwide earnings as well. It is very strange that an athlete who does not even live in the country he or she is competing in has to pay a huge chunk of their earnings to the government of the country where the event is taking place.
Everyone has to pay tax, that is not an issue, but the fact that the government can take 50% in tax from a visiting athlete is just shocking. Taxes are meant to be paid on money earned in a particular place and for services gained from that particular place. If someone is living in a country, earning there and utilising basic services there, then they should be taxed for it. But a visiting athlete who only earns money and helps boost the economy of a foreign place should not be taxed so heavily because they presumably also pay tax in their home country where they live and consume services. So it is basically double taxation on earnings, they are taxed by the country they earn the money in and also they are taxed by their home governments on the money they earn abroad.
The other very strange aspect of the UK tax rule for visiting athletes is the fact that they have to also pay a proportion of their worldwide earnings to the UK government. Now this is a very unfair rule because the UK government is taxing visiting athletes on money they earn in the UK and because they happened to compete in the UK they are also taxed on their worldwide incomes which they did not earn in the UK. This is truly mindboggling. This loopy tax system is not only limited to the UK but can also be found in America. The California government has a tax on visiting sports teams in place. This tax is imposed on only visiting sports teams but not on travelling teams. So basically the state imposes a hefty tax on sports teams that want to play in their state but then do not tax their own teams who play outside the state. So any team that lives and consumes services in California is exempt for being taxed when they earn money out of state.
FIFA is one organisation that likes to exploit taxes when it comes to the World Cup. In the World Cup that just ended in South Africa, FIFA put a strong no tax policy for itself as a condition for being able to host the Cup. So essentially FIFA gets a tax free ride for all the profits it makes from the event. This year saw them make approximately $2.5 billion tax free. All the goods that they sold in and around the stadiums were exempt from being taxed by the South African government and the government created a special tax bubble that FIFA could reside in for the duration of the tournament. Even teams that played at the tournament were taxed when they came to play at the World Cup. So all the earnings that teams made were taxed but FIFA was tax free. Such a system does not seem really fair does it?
Taxation is a very complicated issue and it gives people headaches all the time. No one would have guessed that athletes would have such strange taxes imposed on them and it would get so bad that some athletes would choose not to compete in an event because of tax issues. Hopefully these taxation problems can be sorted out so that fans can see their favourite athletes compete.
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