Originally published in the April 20 edition of World Tax Daily (Copyrights Tax Analysts)
Brazilian Sports Minister Orlando Silva on April 15 announced that the executive branch is finalizing a law project that would grant full tax breaks for activities related to the 2014 soccer World Cup to be hosted by Brazil.
The announcement was made after a meeting in Brasília with FIFA Secretary General Jérôme Valcke and the Local Organization Committee (COL) President Ricardo Teixeira.
Silva said the law project should arrive in Congress before the end of April. He said the law project would exempt FIFA, COL, and companies hired by both entities from all tax payments for goods and services in connection with the 2014 World Cup. The exemptions will also extend to the local TV network that will broadcast the event to the world.
Silva said that full tax breaks are a condition for a country to host the World Cup, and Brazil will not do anything differently.
The law project is scheduled to be approved in Congress before the end of 2010 so that the tax breaks can become effective January 1, 2011. They would remain effective until December 31, 2015, the end of the period deemed necessary to conclude all FIFA’s contracts, deals, and payments associated with the 2014 World Cup.
Although no one at the meeting anticipated how the tax breaks would be granted, an easy way to put the exemptions in place would be to consider FIFA- and 2014 World Cup-related transactions as exports because they are generally exempt from most taxes. However, some exemptions would have to be created, such as for corporate income; no corporate income tax exemption associated with exports currently exists. The law project will address this issue as well as exemptions from withholding tax on royalty and service payments made abroad that are associated with the event.
David Roberto R. Soares da Silva