Stratford, East London, UK, recently became a temporary tax haven. Millions of rands were channelled through foreign subsidiary companies operating in the area before it left the island for the pockets of shareholders and CEOs the world over.
How is this possible in a country like the UK, you might ask? The sad fact is that enacting tax avoidance legislation has now become a criteria for hosting international competitions such as the Olympics. Big name athletes such as Usain Bolt (along with the organizers) have applied pressure to potential host nations to ensure that winnings (and profits) are not taxed. Without these tax sweeteners, the IOC would simply take their corporate circus elsewhere and so begins a race to the bottom in a bidding process that echoes the offshore system.
New tax rules ushered in as part of the winning Team GB bid include “a temporary exemption from UK Corporation Tax and UK Income Tax for certain non-resident companies”. The legislation is written to include “partner” organizations such as McDonald’s and Visa. Both, along with other “partners”, look set to make a tax-free fortune. The former will have a near monopoly on food vending and the latter a total monopoly on venue and ticket payment methods. HM Revenue & Customs says “For the purpose of this exemption, a London 2012 Partner is an organization (known as a Commercial Delivery Partner) that is supplying services to the London Organizing Committee of the Olympic and Paralympic Games (LOCOG), in return for the right to market and advertise themselves or their products for commercial purposes by reference to their association with the Games. It includes a company connected with the Commercial Delivery Partner.”
Many of the corporate sponsors are no stranger to the more traditional tax havens. The long list contains all the usual suspects such as the Cayman Islands, Jersey and the British Virgin Islands. General Electric’s list of subsidiaries is most interesting. It includes 71 subsidiaries listed in just one building in Ireland. Only one of the partner organizations, British Airways, appeared not to have subsidiaries registered in any tax havens.
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