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Argentina’s tax chief laid out new rules aimed at reducing tax evasion and money laundering in football, the country’s sacred national pastime.
Ricardo Echegaray has made Argentina’s football clubs responsible, starting Friday, for putting the profits from player transfers into special bank accounts. Player contracts must be reported along with these profits, and the investors and agents involved must be registered as representing the player. If any of the income or other information they declare doesn’t match, the tax agency will block those responsible from operating within Argentina’s financial system.
Argentina is the world’s top exporter of football players, generating hundreds of millions of dollars in profits as thousands of players are transferred from team to team each year. But Echegaray says the players themselves are often cheated by shadowy businessmen hiding their cash, and their clubs are put at a major disadvantage as powerful financial interests control the cash that drives the game.
His solution: Force people who invest in the rights to players in Argentina’s first- and second-division professional football leagues to identify themselves on government registries. Sports agents representing the players also must register. And the cash must be banked and declared to the Argentine government and therefore tax authorities.
The goal is not to meddle in what many Argentines consider to be a sacred national pastime, he said. The goal is to empower clubs and players to do business more transparently, rather than be at the mercy of hidden interests.
Without naming names, he described how some agents have dominated the careers of promising young players by securing rights to their football futures with nothing more than a new car or a trip to Disney World.
“We are ending this scheme of 20th century sports slavery,” Echegaray declared. “We are making a transcendental change in the market of player transfers, an important step that will make these operations more transparent.” Sports and financial reporters gathered in the tax agency’s auditorium for the announcement questioned Echegaray about how much impact these measures will really have in a country where tax evasion is rampant and in an international sport where money laundering is considered a problem .
Echegaray responded that he can’t control human nature, has no influence over the judicial system, and has no knowledge of what classified information is being gathered by the government’s money laundering watchdog agency, which collects reports on suspicious transactions within football clubs as well as from all other sectors of the economy.
All he can do is collect taxes, Echegaray said, but the new rules do give him a carrot and some sticks to use.
The carrot: Agents and investors who are properly registered and whose information matches what’s reported by the clubs and players will only see 17.5% of the profits deposited in these special accounts withheld by the tax agency. The stick: Those who aren’t registered will see up to 90% withheld until their annual income taxes are resolved.
An even bigger stick: Echegaray said the tax agency will disable the “CUIT,” or tax ID number, of anyone involved in a player transfer whose financial gains aren’t fully declared and match those of others involved in the transaction, until the scofflaw properly settles any tax debts.
That’s a powerful weapon in Argentina, he said, effectively preventing the investor or agent from legally doing business in the country.
“We are going to impose transparency that exposes the identities of the real owners of the football players,” he vowed.