The London 2012 Olympic Games begin next week and many sponsored companies are quick to add the ubiquitous Olympic logo to their advertisements. In addition, Olympic Park is serving as a tax haven for the entire duration of the games because of special tax rules included as part of the original bid in London. As a result, sponsors are not required to pay taxes on earnings from the Games. However, two companies – Coca-Cola and McDonalds – have stated they are intending to pay corporate and income taxes for the all of the Olympic Games.
The Revenues and Customs of England said the tax breaks are available to all foreign nationals and include corporations, athletes, judges, journalists, and any international workers for the Games. The relief is not available for U.K. based companies though. As a result of such a large-scale tax break for all these companies, the U.K. has the potential to lose a significant amount of money from the Games. One organization known as “38 Degrees” has collected more than 150,000 signatures to urge sponsors to reconsider their tax break.
The cost of McDonalds declining the break is extremely minimal – only 0.1% of its annual sales in the U.K. Coca-Cola and McDonalds are 2 of 11 international companies who pay nearly $1 billion to sponsor the Winter and Summer Olympics over the four-year cycle.
“Coca-Cola has never intended to, and will not be making, any corporate or income tax exemption claim with respect to any activity concerning our involvement with the London 2012 Olympic and Paralympic Games,” the corporation said.
In even more recent news, General Electric and Visa also declined the tax-relief offered by the Summer Games. The goodwill and public relations that will come from declining the tax relief will most likely outweigh the benefits of not paying taxes for revenues derived from the Games.
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