More sponsors are caving in to public pressure not to take advantage of the tax breaks offered to foreign sponsors and suppliers of the London 2012 Games.
Part of the Team GB Olympic winning bid included the rule, stipulated by the IOC, that there would be ‘temporary exemptions from UK Corporation Tax and Income Tax for certain non-resident companies’, which apply from the end of March to November 8.
This meant that any profits that the overseas sponsors made would not be taxed, meaning that the UK effectively becomes a tax haven for seven months because of the Games, which have in a large part been paid for by British taxpayers.
Although HMRC said that British taxpayers were not losing out because London would not have won the bid to host the Games without meeting the committee’s demands.
However, critics argued that the measures allow companies linked to or sponsoring the Games to save millions by using corporate subsidiaries registered outside the UK.
And due to extensive lobbying by pressure groups such as 38 Degrees, most of the sponsors and suppliers have been formally declaring that they will waive their rights to the breaks.
McDonalds was the first of the non UK-based sponsors to say that they will waive their right to the exemption and they have been followed by Coca-Cola, General Electric, EDF, Visa, BMW, Samsung and, most recently, Adidas.
Some companies, such as Atos, have stated that the break doesn’t apply to them, as they will not be selling items at the Olympics, although technically, as they will make a profit from the Games, they should be taxed.
The IOC itself will be exempt and is set to earn £2.7bn from the Games. Other exempted participants include foreign journalists, judges and the athletes themselves.
Rob Chedzoy specialises within providing tax planning advice, support and guidance to owner-managed businesses.