By David Owen
March 24 – Low taxes and political neutrality: those are two of the reasons why, as I understand it, so many sports bodies over the years have set up headquarters amid the lakes and mountains of Switzerland.
Zurich-based FIFA, though, has entered a period where its tax bill is, to use the technical term, going through the roof. Based on the governing body’s consolidated income statements, it has soared from $893,000 in 2010 to $36.19 million in 2014, at the same point in the subsequent four-year World Cup cycle. That is around a 40-fold increase.
What is more, it has shown an increase in every intervening year, from $4.87 million in 2011 to $17.05 million (2012), $17.16 million (2013) and now $36.19 million in the newly-published 2014 financial report. So I think we are entitled to call this a trend. And to wonder what new peak it might scale in 2015.
As for why this is happening though, I am completely in the dark. There may be an element of comparing apples and oranges, since in 2010 the relevant entry was labelled “income taxes” and since then “taxes and duties”. Even so, the bill has risen from $4.87 million to $36.19 million since 2011.
If you look at the consolidated cash flow statements, under taxes and duties paid, meanwhile, the big jump came last year, with entries rising from $944,000 in 2010 to $4.5 million (2011), $5.46 million (2012), $6.16 million (2013) and finally $34.05 million (2014).
Has there been a change in the law? Is this in some way a consequence of the venues FIFA has chosen for its competitions?
I twice approached FIFA in pursuit of a simple explanation. The first time I was told that “a direct comparison between the years is not meaningful for the following reasons”.
The “basis for FIFA’s taxation in Switzerland is – as required by law – the statutory annual accounts which are on a stand-alone basis in line with local accounting requirements…and presented in Swiss francs. The published financial report shows the consolidated financial statements according to International Financial Reporting Standards (IFRS) in US dollars including all FIFA subsidiaries, which are taxed separately and differently in accordance with relevant law in applicable countries. Tax expenses between years and/or cycles may vary based on tax-related accruals.”
I could detect nothing in that to explain a 40-fold increase in the space of four years, so I tried again, and was told: “Tax calculation is a very technical matter. For the reasons given to you previously an easy comparison between years and cycles is not possible. You have to consider aspects such as consolidation versus individual subsidiaries, currency effects, IFRS versus local accounting laws, period accruals, etc.”.
So there you have it. If anyone can shed more light on the mystery, perhaps you would get in touch. In the meantime, we can all be grateful that world football’s governing body is doing its bit to help pay for hard-pressed public services.
Contact the writer of this story at moc.l1734850648labto1734850648ofdlr1734850648owedi1734850648sni@n1734850648ewo.d1734850648ivad1734850648