5.4 Taxes 5.4.1 Taxes Applicable in China The current Chinese industrial and commercial tax regime (excluding tariffs and agricultural tax) comprises 17 specific taxes. Of these, the following taxes would apply for the hosting of the Olympic Games in Beijing: • • • • • • •
business tax; value-added tax (VAT); consumer tax; corporate income tax; individual income tax; vehicle and road tax; and stamp duty.
5.4.2 The Tax Status of BOCOG As indicated in Theme 2, BOCOG will be established as an independent legal entity, legally responsible for civil obligations and liabilities. Under current Chinese Taxation Law, BOCOG would be a taxpayer. In support for the Olympic Movement, however, the Chinese Government has promised that, following approval by the Legislature, BOCOG will be exempt from taxes. This exemption will include revenues from the sale of broadcasting rights for the Games, from the Olympic marketing programme, and from sponsorship activities, whether the party that makes payments to BOCOG is resident in China or elsewhere.
5.4.3 Other Taxation Matters In support for the Olympic Movement, the Chinese Government has promised, upon approval by the Legislature, to exempt the IOC and other Olympic participants from taxes otherwise required under Chinese Taxation Law. These include: • business tax and withholding tax on income from the Beijing Olympic Games (e.g. income from the sale of television rights); • individual income tax due in China for participating athletes in conjunction with various monetary prizes; • VAT levied on the proceeds from the sale by BOCOG of sponsored commodities and postOlympic sale of assets; and • reimbursement to BOCOG of the VAT levied on commodities received as donations or sponsorships or purchases for its own use. Whilst the Chinese Government can grant tax exemptions within China, it is understood that residents in foreign countries may be required to pay withholding or similar taxes in their respective countries for payments to BOCOG for media rights, the Olympic Marketing programme and other sponsorships.
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Should Beijing be successful in its bid, the tax exempt status of BOCOG will be favourable for the clarification of the conditions of such withholding taxes. In addition we will negotiate with the governments of the countries concerned regarding exemptions for these taxes, if necessary.