Report says FIFA outdoes NGOs in tax exemption
Jun 17, 2014 06:02 PM EDT
There have been many reports of FIFA reaping in more revenue from this year's World Cup, alongside with numbers from broadcasting rights and advertiser fees it charges from businesses. But a report by a Forbes contributor perhaps would emphasize how the World Cup is the world soccer organization's most prized cash cow.
From its humble beginnings in 1904 when it served just seven member associations mostly in the euro region, it has now grown into a powerhouse of 310 people across 35 nations and has a membership pf 209 member associations. FIFA management is reportedly set up just like the US government, with the Congress as its legislative body, Executive Committee as its executive body and General Secretariat as its administrative body.
The World Cup tournaments has proven itself to be an important source of revenue for the organization, with the 2010 tournament in South Africa alone bringing in $2.408 billion in television rights and $1.072 billion in marketing rights. For this year's World Cup, it is estimated that it would be bringing in a maximum of $5 billion for FIFA. Take the amount spent on expenses spent in promoting the affair, FIFA still benefits much from the tournament largely because it does not pay taxes.
Set up as a not-for-profit association in Switzerland, FIFA does not pay any taxes from revenues it gains from every World Cup tournament, the Forbes report wrote. It has also been observed that the organization has also managed to wrangled itself from laws in Brazil that would have required the organization to pay tax money.
According to Brazilian law, "(There are) a series of exemptions on federal taxes granted exclusively: (i) to FIFA itself and related entities domiciled abroad; (ii) to FIFA's Brazilian subsidiary and to the Brazilian Broadcasting Source; (iii) to FIFA's service suppliers established in Brazil; and (iv) to non-resident individuals hired or engaged to work in the events."
The report also said that FIFA has somewhat a mandate in its every agreement with the host country regarding tax exemption. And for the "other parties" like its corporate sponsors, this would be a win-win on their side considering that the offer the organization emphasize in every bidding process to interested nations is the potential tourism revenue opportunities that the World Cup would bring.
Although supporters of the Cup are quick on the defense that, in the case of this year's tournament in Brazil, the event will cost the government an estimated $248.7 million in lost revenue, the return of playing host to the World Cup will bring the country more than the amount given up in tax dollars, the Forbes report said.