Tax rules ushered in as part of London’s winning bid to host the Games mean the Olympic site has become a temporary tax haven. Photograph: Clive Rose/Getty Images
Four of the biggest names sponsoring this summer’s Olympics publicly waived the right to use UK tax breaks handed to them when London won the right to stage the Games.
McDonald’s and Coca-Cola have said they will decline relief handed to the 11 “worldwide” sponsors of the Games, meaning the profits made from selling burgers and drinks to spectators in the Olympic Park will now be taxed. The US conglomerate GE said it would not be applying for the tax break. Credit card giant Visa also said that all its earnings from the Games would be subject to UK corporation tax.
The moves follow pressure from the online campaign group 38 Degrees, whose online petition has gathered more than 150,000 signatures. 38 Degrees said on Wednesday: “It’s working! McDonald’s have said they won’t be taking the tax break â€“ but please sign the petition to keep pressure on the other sponsors.”
Both McDonald’s and Coca-Cola insisted they had always intended to waive their rights to a tax break and Wednesday’s statements were clarifications rather than reactions. GE said: “All projects associated with our Olympic sponsorship have been undertaken through GE’s UK companies and so are subject to normal UK tax rules.”
However In its statement, Visa said: “All fees from all Visa transactions in the UK, including earnings from the Games, are subject to UK corporation tax in the normal way and are not subject to any special treatment because of our status as an Olympic sponsor.”, although the International Olympic Committee (IOC) documents explaining the sponsors’ roles state: “For the London 2012 Olympic Games, there will be approximately 3,200 contactless enabled point-of-sale devices in merchant locations in Olympic Games venues. Visa will also set up eight ATMs within the Games footprint.” Visa, which was the only payment card accepted for Olympic ticket purchases, charges fees each time it facilitates a transaction.
The London 2012 bill is partly funded by more than Â£1bn of sponsorship, which includes Â£700m raised locally by the organising committee and a further Â£700m contribution from sponsorship and broadcast revenues raised by the IOC.
The 11 top-level sponsors â€“ including Visa, Coca-Cola and McDonald’s â€“ jointly paid the IOC $957m (Â£612m) to sponsor the 2010 Winter Olympics in Vancouver as well as the London Games, while 42 companies â€“ including BT, British Airways and Adidas â€“ contributed cash, products and services worth Â£700m directly to London 2012.
New tax rules ushered in as part of London’s winning bid to host the Games mean the Olympic site in east London has become the world’s latest, albeit temporary, tax haven. These rules mean so-called partner organisations could pay no tax at all on their earnings from the Games.
McDonald’s made clear that the cost of turning down the tax break would be minimal, as revenue from the Games would be less than 0.1% of its annual sales in the UK. It said in a statement: “We will not be making any corporate income tax exemption claim with respect to any activity concerning our involvement with the London Olympic and Paralympic Games.”
Coca Cola added: “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. More than 90% of the Coca Cola employees working at the Olympic and Paralympic Games are UK nationals. Those from abroad will be paid by their respective home countries.”
The new legislation also exempts foreign nationals working on the Games in the UK from paying income tax on any earnings. That includes journalists, representatives of official Games bodies, judges, and the athletes themselves.
Richard Murphy from the Tax Justice Network said: “It is bound to cost the UK tens of millions of pounds to give tax concessions to all the large companies who are operating at the Olympic site. We’re giving money away that we need to solve our debt crisis and to preserve essential public services.”