Originally published in the September 28 edition of World Tax Daily (Copyrights Tax Analysts)
Brazil’s Federal Revenue Department (FRD) on September 23 announced that contracts signed for the 2014 Soccer World Cup to take place in Brazil contain full tax exemptions, including from income tax on profits, for Fédération Internationale de Football Association (FIFA) companies domiciled outside Brazil.
FRD Division Chief of Tax Studies Augusto da Cunha made the announcement in a hearing before the Chamber of Deputies’ Commission of Financial Enforcement and Control. Cunha said the executive branch will send related law projects to Congress. He also said FRD officials have been working to close loopholes that might facilitate money laundering.
After the law projects are finalized and submitted to Congress, some contracts already signed by FIFA might have to be reviewed to ensure that they comply with the new tax provisions and exemptions, Cunha said.
FRD officials are communicating with German authorities and organizers about what exemptions were granted when the 2006 FIFA World Cup was held in Germany. One of the proposals for the 2014 World Cup is to create a flat 10 percent tax on sales of tickets and hotel services.
According to Mauro Nascimento, director of social programs for the Ministry of Planning, a study by the 2014 World Cup Local Organization Committee estimates the World Cup could generate BRL 65 billion in income, including infrastructure investments, advertising, lodging, and sponsorships. The committee estimates that during the weeks of the event 600,000 tourists will visit Brazil and spend $5,500 each, or $3.3 billion.
Those figures have drawn the attention of the executive branch, the FRD, and even Congress, which will be called on to review and vote on tax matters related to the biggest sporting event to occur in Brazil in decades.
David Roberto R. Soares da Silva