FIFA scandal hits Mexico

Through a U.S. subsidiary, CONCACAF knowingly evaded taxes in Mexico. This is one of the irregularities investigated that led to the arrest of eight directors of the FIFA, according to documents obtained by EL UNIVERSAL.

"Corruption, tax evasion and money laundering are certainly not the cornerstones of any successful business.  Whether you call it soccer or football, the fans, players and sponsors around the world who love this game should not have to worry about officials corrupting their sport.  This case isn't about soccer, it is about fairness and following the law.  IRS-CI will continue to investigate financial crimes and follow the money wherever it may lead around the world, leveling the playing field for those who obey the law," the U.S. Department of Justice said.

According to an internal investigation of the CONCACAF, based in Florida, the company Concacaf Marketing and TV Inc. (CMTV) was created in 2003, which according to Chuck Blazer would be a "fully owned subsidiary of CONCACAF, but a taxable entity, which will allow for favorable treatment under the tax treaty laws with Mexico."

CMTV was registered as a non-profit corporation on June 19, 2003 in Florida, through the firm Collins and Collins and it was authorized to have a million shares.

Meanwhile, CONCACAF was incorporated in 1994 as a non-profit company under the laws of the Bahamas. Operating as a non-profit, CONCACAF qualified for tax-exempt status under U.S. law. U.S. tax laws require non-profit organizations generating income in the United States, like CONCACAF, to file income tax returns annually. A non-profit organization that fails to file a federal income tax return for three consecutive years loses its tax-exempt status. From 2007 to 2011, CONCACAF failed to file income tax returns. As a result, CONCACAF lost its tax exempt status in May 2010.

CMTV was created, at least in part, to address tax withholding issues in Mexico. Under Mexican law, certain types of payments, including royalties associated with sporting event broadcast rights, are subject to a withholding tax collected from the payer of the royalty.

The withholding rate on broadcast royalties generally is 40% if paid to a resident of a country designated as a tax haven and 25% if paid to a resident of a country, such as the United States, that has not been designated as a tax haven.

However, under a bilateral tax treaty between the United States and Mexico, the 25% withholding rate is further reduced to 10% for qualified U.S. residents, so CONCACAF created a taxable U.S. subsidiary like CMTV that would be entitled to treaty benefits including the reduced withholding rates.

In a communication in 2003, Chuck Blazer specifically stated that he wanted to create a U.S. taxable entity to help minimize tax withholdings under Mexican law. He wrote that, so long as the subsidiary was a "US taxable corp., then 10% withheld in Mexico."

Blazer later informed Warner of his decision to create a taxable subsidiary in an email dated June 6, 2003. Blazer told Warner that CMTV would be a "fully owned subsidiary of CONCACAF, but a taxable entity, which will allow for favorable treatment under the tax treaty laws with Mexico."

The Committee concluded that Chuck Blazer violated U.S. federal tax laws by willfully failing to file federal tax returns and willfully failing to pay taxes on behalf of CMTV for the years 2004 to 2010 and by failing to file federal tax returns for CONCACAF for the years 2006 to 2010.

The document does not specify whether Mexican officials or businessmen are involved in the case.