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TOPIC: Sponsors urged to waive Olympic tax breaks worth tens of millions

Sponsors urged to waive Olympic tax breaks worth tens of millions 19 Jul 2012 11:30 #1

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www.independent.co.uk/sport/olympics/oth...illions-7957148.html
After McDonald's and Coca-Cola bow to online pressure, campaigners insist others must follow
Cahal Milmo Author Biography

Thursday 19 July 2012

Corporate sponsors of the London Olympics, who could make hundreds of millions of pounds from sales and publicity linked to the Games, are coming under increasing pressure to turn down generous tax exemptions granted by the Government.

Coca-Cola, which has a monopoly on soft drink sales at the Olympic Park in east London, followed fellow sponsor McDonald's yesterday by saying it would decline the tax break. Campaigners claim the exemptions are worth tens of millions of pounds to the corporations whose logos are plastered across Games venues.

Other non-UK Olympics sponsors including Visa, the electronics conglomerates Samsung and Panasonic, and the American chemicals giant Dow were urged to follow suit and formally announce they will pay full corporation and income tax on their earnings from the Games.

The Olympic Park is dotted with sales points and shops selling goods – from soft drinks to tablet computers – offered by sponsors, who are protected by stringent marketing rules.

An online petition calling on sponsors to decline the exemptions had gathered more than 160,000 signatures yesterday after campaigners said the tax breaks in effect treated Olympic venues like "offshore havens".

The exemptions were granted by HMRC as part of a package of concessions demanded by the International Olympic Committee. They apply to corporation and income tax for non-UK companies and individuals working on the Olympics between 30 March and 8 November this year.

HMRC said British taxpayers were not losing out because London would not have won the bid to host the Games without meeting the committee's demands.

But critics said the measures allow companies linked to or sponsoring the Games to save millions by using corporate subsidiaries registered outside the UK. The tax break also applies to competitors and their multimillion-pound endorsement deals.

Richard Murphy, director of Tax Research UK, said the loss of income to the Treasury from revenues generated by the 5.5 million expected visitors to the £11bn Olympics would run into tens of millions of pounds.

"The Olympics was founded on an ideal of participation. Tax is based on the same ideal – that we all play our part. This exemption undermines that ideal and puts the Olympics outside the society that has given enormously to host the Games," he said. "We're giving away money that we need to solve our debt crisis and to preserve essential public services."

McDonald's, which expects to sell £3m of food at its 1,500-seat Olympics restaurant (its biggest in the world), acknowledged that the cost of turning down the exemption would be minimal since its revenues from the Games would be less than 0.1 per cent of its annual UK sales.

Coca-Cola pointed out that 90 per cent of its Olympics staff are UK nationals, while General Electric said all of its projects associated with the Olympics were undertaken by its UK companies and were subject to normal tax rules.

Adidas and BMW, which have secured respective deals to supply clothing to British competitors and cars to transport Olympics officials, said the exemptions did not apply to them. Procter & Gamble, Omega and Atos also said the exemptions did not apply because they were not selling items at the Olympics.

Visa and Dow declined to comment. Samsung, Panasonic and computer company Acer did not respond to requests to comment.

Tax in brief: How the exemptions work

The London 2012 tax exemptions granted by HMRC are part of a package of concessions required by the International Olympic Committee (IOC). They also include the provision of 500 chauffeur-driven cars and 40,000 hotel rooms.

The tax breaks, which will apply for seven months, remove the requirement to pay corporation tax and income tax for "non-resident" companies and individuals who take part in "Games-related activities" or provide services to London 2012.

Thus non-UK sponsors and individuals, from athletes to visiting journalists, will not have to pay tax while involved in the Olympics. Nor will the Swiss-based IOC, which is set to earn £2.7bn from the Games.

The thing that really pisses me off about this story (over and above the fact that it features 'the Olympics') is that it highlights the fact that we have effectively been held to ransom by corporations...yet again. We wouldn't have the Olympics if these tax breaks hadn't been promised in the first place.

Oooh...I'm really getting excited about it now. :facepalm:
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Last Edit: 19 Jul 2012 11:31 by Abs.
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Re: Sponsors urged to waive Olympic tax breaks worth tens of millions 19 Jul 2012 11:32 #2

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Comment from the same page:
Valencian • an hour ago • parent

In effect the demands were a not so subtle form of blackmail, no tax breaks, no games. I struggle to understand how the IOC can put any sort of demands relating to tax to the Government, and also why the Government accepted them. There is something not quite right about this.
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Re: Sponsors urged to waive Olympic tax breaks worth tens of millions 19 Jul 2012 11:52 #3

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blogs.independent.co.uk/2012/07/18/the-d...ations-gone-too-far/
Matt Carr

The London Olympic Organising Committee (Locog) may not have sufficient security personnel, and it doesn’t even seem to know how many it actually needs. But no one can say the organizers don’t have a sense of priority.

Next week 300 Locog ‘enforcement officers’ will fan out across the country in an attempt to eliminate any unauthorised ‘association’ with the 2012 Olympiad.

Under the terms of the 2006 London Olympic Games and Paralympic Games Act, these ‘brand police’ will be able to impose fines of £20,000 on businesses, shops and charities that engage in such activities.

They can also penalise athletes who mention brands not included with the official sponsorship roster, and prevent the unauthorised use of ‘listed words’ such as ‘London’, ‘London Twenty Twelve’, ‘Gold’, ‘Silver’, ‘Bronze’ and, most ludicrously, ‘summer.’

Luckily, if you live in ‘Gold Street’ or ‘Silver Road’, you can still say so. But if you are an airline company, you better not hand out complimentary t-shirts saying ‘flying you to London, Olympic host city’.

Don’t put up posters saying ‘backing the 2012 Games’ or ‘supporting the London Olympics’ or you will have to take it down, as the University of Derby was told to do this April. And woe betide a hotel that offers a ’10 per cent discount for London 2012.’

These obsessive restrictions form part of a censorship regime that one might associate with China or North Korea, and which calls into question Locog’s representation of the Games as a promotional platform and an engine of economic regeneration for London (or should that be ‘the capital’) and the country as a whole.

The idea that giant multinationals like Dow Chemicals, McDonald’s and Proctor & Gamble need ‘protecting’ is ludicrous, since they are already guaranteed unrivalled publicity even without Locog’s attempts to enforce their monopoly.

Why should a pub, a hotel or a restaurant – or a charity – not be able to make money from the Games too, as long as they aren’t engaging in fraud or producing counterfeit products?

Locog and the Government insist that the Olympiad is intended to ‘inspire’ the nation. Yet it is barely permitted even to proclaim in public that you back or support the Games without running the risk of legal action from Locog’s brand enforcers.

In May an 81-year-old Norfolk woman was ordered to withdraw a doll wearing a hand-knitted 2012 running kit that she intended to sell for £1 to raise money for a church fundraising sale – or face the consequences. So much for Olympic universality.

One suspects that this is not quite what Baron de Coubertin had in mind when he founded the International Olympic Committee. And it really does raise the question of whether the London Olympics is really the “people’s games” at all – or whether it is nothing more than a giant shop window for large corporations that see everything as a potential marketing opportunity.

Matt Carr is a writer and journalist. His books include ‘The Infernal Machine: A History of Terrorism’ and the forthcoming ‘Fortress Europe: Dispatches from a Gated Continent’. He blogs regularly at www.infernalmachine.co.uk

Karen Earl

It’s important to remember that events like the Olympics would not be possible without sponsorship funding. Of Locog’s c.£2bn operating budget, over £700m is met by sponsors and it’s crucial that the rights for which these sponsors have paid so much are protected against other companies who try to pass themselves off as official or connected to the Games in some way – ambush marketing in other words.

Some will remember the clash which erupted in 1992 between Visa and American Express over the winter Olympics in Albertville, France. Visa was the official sponsor of the Games; American Express launched a series of advertisements which tried to convince the public that it was the official credit card of the Games. Visa had paid a reported $20 million dollars for its Olympic rights – money vital to the International Olympic Committee (IOC) in staging the Games. Quite rightly, IOC took American Express to court and won.

Perhaps it’s worth considering the implications if the IOC had either not taken the case to the courts, or if it had not won. Quite simply, Visa would not have continued its sponsorship of the Games in the future. It could also have sued the IOC for a breach of contract – one imagines an eye-watering amount in settlement. Arguably, the IOC might have been able to afford that one case, but that would not have been the end of it. All its other Games sponsors would have spoken with their feet – and left. It’s doubtful whether the Olympic Games movement could have recovered from such a situation.

So, quite simply put, sponsors of the Olympic Games pay a great deal of money to be official partners of an event which has the eyes of the world upon it. The benefits are huge. If they weren’t, they wouldn’t do it.

The IOC and its staging partners – in this case, Locog – have a legal obligation to protect those sponsors and the rights they’ve purchased.

The public doesn’t always understand a sometimes high-handed approach to the protection of those rights but without it there might never be another Olympic Games – or a football World Cup, or an F1 Grand Prix or any number of sporting events we enjoy on a weekly and annual basis. That’s the message. And, once the public understands it, they’ll understand why they are only offered Coca-Cola and its sister products, only able to use a Visa card, only ….. and so it goes on. Without those products there’d be no Games in London in nine days’ time.

Karen Earl is chairman of the European Sponsorship Association. She has worked in the sponsorship industry for over 35 years, starting her own agency, Karen Earl Sponsorship, in 1984. The agency was renamed as Synergy in 2008 and is now part of Engine. www.sponsorship.org

*This article was amended to clarify the £2bn figure quoted by Karen Earl. This cost of the staging of the Games is separate to the publicly-funded £9.3bn budgeted in 2007 for venues and infrastructure, which rose to around £11bn earlier this year.
What we are today comes from our thoughts of yesterday, and our present thoughts build our life of tomorrow: Our life is the creation of our mind.

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