Sponsors urged to waive Olympic tax breaks worth tens of millions

After McDonald's and Coca-Cola bow to online pressure, campaigners insist others must follow

Corporate sponsors of the London Olympics, who could make hundreds of millions of pounds from sales and publicity linked to the Games, are coming under increasing pressure to turn down generous tax exemptions granted by the Government.

Coca-Cola, which has a monopoly on soft drink sales at the Olympic Park in east London, followed fellow sponsor McDonald's yesterday by saying it would decline the tax break. Campaigners claim the exemptions are worth tens of millions of pounds to the corporations whose logos are plastered across Games venues.

Other non-UK Olympics sponsors including Visa, the electronics conglomerates Samsung and Panasonic, and the American chemicals giant Dow were urged to follow suit and formally announce they will pay full corporation and income tax on their earnings from the Games.

The Olympic Park is dotted with sales points and shops selling goods – from soft drinks to tablet computers – offered by sponsors, who are protected by stringent marketing rules.

An online petition calling on sponsors to decline the exemptions had gathered more than 160,000 signatures yesterday after campaigners said the tax breaks in effect treated Olympic venues like "offshore havens".

The exemptions were granted by HMRC as part of a package of concessions demanded by the International Olympic Committee. They apply to corporation and income tax for non-UK companies and individuals working on the Olympics between 30 March and 8 November this year.

HMRC said British taxpayers were not losing out because London would not have won the bid to host the Games without meeting the committee's demands.

But critics said the measures allow companies linked to or sponsoring the Games to save millions by using corporate subsidiaries registered outside the UK. The tax break also applies to competitors and their multimillion-pound endorsement deals.

Richard Murphy, director of Tax Research UK, said the loss of income to the Treasury from revenues generated by the 5.5 million expected visitors to the £11bn Olympics would run into tens of millions of pounds.

"The Olympics was founded on an ideal of participation. Tax is based on the same ideal – that we all play our part. This exemption undermines that ideal and puts the Olympics outside the society that has given enormously to host the Games," he said. "We're giving away money that we need to solve our debt crisis and to preserve essential public services."

McDonald's, which expects to sell £3m of food at its 1,500-seat Olympics restaurant (its biggest in the world), acknowledged that the cost of turning down the exemption would be minimal since its revenues from the Games would be less than 0.1 per cent of its annual UK sales.

Coca-Cola pointed out that 90 per cent of its Olympics staff are UK nationals, while General Electric said all of its projects associated with the Olympics were undertaken by its UK companies and were subject to normal tax rules.

Adidas and BMW, which have secured respective deals to supply clothing to British competitors and cars to transport Olympics officials, said the exemptions did not apply to them. Procter & Gamble, Omega and Atos also said the exemptions did not apply because they were not selling items at the Olympics.

Visa and Dow declined to comment. Samsung, Panasonic and computer company Acer did not respond to requests to comment.

Tax in brief: How the exemptions work

The London 2012 tax exemptions granted by HMRC are part of a package of concessions required by the International Olympic Committee (IOC). They also include the provision of 500 chauffeur-driven cars and 40,000 hotel rooms.

The tax breaks, which will apply for seven months, remove the requirement to pay corporation tax and income tax for "non-resident" companies and individuals who take part in "Games-related activities" or provide services to London 2012.

Thus non-UK sponsors and individuals, from athletes to visiting journalists, will not have to pay tax while involved in the Olympics. Nor will the Swiss-based IOC, which is set to earn £2.7bn from the Games.

Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
Caption competition
Caption competition
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Daily Quiz
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas