Argentina's tax chief laid out newrules Thursday aimed at reducing tax evasion and money laundering in football,the country's sacred national pastime.
Ricardo Echegaray has made Argentina's football clubsresponsible, starting Friday, for putting the profits from player transfersinto special bank accounts. Player contracts must be reported along with theseprofits, and the investors and agents involved must be registered asrepresenting the player. If any of the income or other information they declaredoesn't match, the tax agency will block those responsible from operatingwithin 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 playersare transferred from team to team each year. But Echegaray says the playersthemselves are often cheated by shadowy businessmen hiding their cash, andtheir clubs are put at a major disadvantage as powerful financial interestscontrol the cash that drives the game.
His solution: Force people who invest in the rights toplayers in Argentina's first- and second-division professional football leaguesto identify themselves on government registries. Sports agents representing theplayers also must register. And the cash must be banked and declared to theArgentine government and therefore tax authorities.
The goal is not to meddle in what many Argentines considerto be a sacred national pastime, he said. The goal is to empower clubs andplayers to do business more transparently, rather than be at the mercy ofhidden interests.
Without naming names, he described how some agents havedominated the careers of promising young players by securing rights to theirfootball futures with nothing more than a new car or a trip to Disney World.
"We are ending this scheme of 20th century sportsslavery," Echegaray declared. "We are making a transcendental changein the market of player transfers, an important step that will make theseoperations more transparent."
Sports and financial reporters gathered in the tax agency'sauditorium for the announcement questioned Echegaray about how much impactthese measures will really have in a country where tax evasion is rampant andin an international sport where money laundering is considered a problem .
Echegaray responded that he can't control human nature, hasno influence over the judicial system, and has no knowledge of what classifiedinformation is being gathered by the government's money laundering watchdogagency, which collects reports on suspicious transactions within football clubsas well as from all other sectors of the economy.
All he can do is collect taxes, Echegaray said, but the newrules do give him a carrot and some sticks to use.
The carrot: Agents and investors who are properly registeredand whose information matches what's reported by the clubs and players willonly see 17.5 percent of the profits deposited in these special accountswithheld by the tax agency. The stick: Those who aren't registered will see upto 90 percent withheld until their annual income taxes are resolved.
An even bigger stick: Echegaray said the tax agency willdisable the "CUIT," or tax ID number, of anyone involved in a playertransfer whose financial gains aren't fully declared and match those of othersinvolved in the transaction, until the scofflaw properly settles any tax debts.
That's a powerful weapon in Argentina, he said, effectivelypreventing the investor or agent from legally doing business in the country.
"We are going to impose transparency that exposes theidentities of the real owners of the football players," he vowed.