Premier League clubs are facing tax liens

Premier League football teams have been accused of evading up to £470 million in UK tax, while Malta is preparing to change its one-of-a-kind corporate tax structure.

According to a BBC story yesterday, March 30, football clubs allegedly avoided VAT, income tax, and national insurance contributions through a tax evasion plan.

According to the BBC, the Premier League avoided paying tax by using 'dual representation' contracts, in which fees paid to agents of players are routed partially through the clubs, halving the tax owing on the transactions.

HM Revenue and Customs would collect up to 60% of a fee paid to an agency by a player, however this tax burden is reduced to 30% if the revenue is split 50:50 between the player and the club via dual representation.

The Premier League tax arrangements were examined by Dan Neidle, founder of the think firm Tax Policy Associates. He predicts that Premier League teams have saved £470 million ($581 million) in UK tax since 2015, with a further £250 million saved between 2019 and 2021.

Malta plans to revamp its business tax system by 2025.

According to the Times of Malta on March 29, finance minister Clyde Caruana reiterated the Maltese government's commitment to corporation tax reform.

Caruana told a gathering of finance experts that Malta should accept "the bitter pill now" rather than wait for the EU to force changes on the island.

Businesses in Malta pay 35% income tax (rather than the standard corporation rate), however taxpayers can receive up to 30% in tax refunds. This permits many businesses to pay 5% or less in taxes.

Meanwhile, holding structures registered in Malta are exempt from all taxes, have a 0% dividend tax rate, and there is no withholding tax or stamp duty. However, in accordance with OECD obligations, Malta is anticipated to implement a minimum corporation tax structure of 15%.

Caruana proposed reforming the business tax system in April 2022, but these plans were cancelled in September. Nonetheless, the Maltese government remains committed to implementing tax reform by 2025.

According to an EY poll, businesses are preparing for a new era of tax concerns.

According to an EY study released on Wednesday, March 29, businesses are bracing for increased tax scrutiny in the aftermath of the COVID-19 outbreak, which halted tax disputes.

According to the EY Tax Risk and Controversy Survey, 51% of company tax leaders anticipate more disputes in the next two years as a result of increased attention on transfer pricing agreements.

Almost 40% of tax leaders stated their organisations have a dedicated tax risk or controversy leader, and 80% said such a post would provide substantial value to their business.

Nearly 70% of respondents expect their attention on tax governance to grow in the future years, while 86% want to be more proactive in preventing tax risks from becoming issues.

During the fourth quarter of 2022, EY teams polled over 2,100 tax and finance leaders from 47 jurisdictions and 20 industry sectors. This was the survey's greatest sample size in its 20-year existence.

Ireland is considering a top-up tax in lieu of a higher headline corporate rate.

Rather than raising the headline corporate tax rate from 12.5% to 15%, the Irish government is proposing a qualified domestic minimum top-up tax (QDMTT).

According to The Irish Times on Tuesday, March 28, Ireland may be planning to keep its low corporation rate by implementing a QDMTT as part of its commitment to pillar two.

Michael McGrath, the finance minister, has yet to determine what to recommend to the cabinet, although the Department of Finance is anticipated to produce a feedback paper suggesting the top-up tax.

The QDMTT would apply a 15% corporate tax rate to enterprises with a yearly turnover of more than €750 million ($810 million), while businesses with less would continue to pay up to 12.5%.

Ireland has long had a headline corporation tax rate of 12.5%, making it one of the EU's most competitive tax jurisdictions. Only Hungary has a lower headline corporate tax rate, at 9%, with Lithuania coming in third with a rate of 15%.

BNP Paribas, HSBC, and Société Générale are facing tax searches in Paris.

On Tuesday, March 28, more than 150 French agents raided the Paris headquarters of BNP Paribas, HSBC, and Société Générale, among other financial firms, as part of a dividend tax inquiry.

According to Le Monde, the National Financial Prosecutor (PNF) is probing the five banks as part of its investigation into tax fraud and money laundering. BNP-owned Exane and BPCE investment house Natixis are among the other financial companies targeted.

The PNF confirmed the raids on the five bank branches as part of its investigation into 'cum-ex' dividend stripping. This is a trading technique in which banks and investors trade shares of firms on the day of their dividend payment in order for participants to claim tax breaks.

None of the banks have been accused of tax evasion or money laundering. However, the PNF has stated that a compensation request of more than €1 billion ($1.1 billion) could be made, including fines and interest.

By fLEXI tEAM