The concept of tax is as old as mankind
itself and had taken different shapes and dimensions dating back to the
earliest primitive period to the present modern time. It should be noted that
there is no legislative definition for tax; hence there has been various
definitions and meanings given by various authors. Tax has been defined as a fee  charged 
by a  government  on 
a  product,  income 
or  activity.
Tax is defined
as “the
compulsory exaction of money by a public authority for public purpose or
raising money for the purpose of government by means of contribution from
individual persons.”

since ancient times, sport has played an important role in human life,
providing health and social benefits, entertainment and leisure. Competitions
and championships, inherent in the pursuit of sport, have always attracted
athletes and spectators alike, as celebrations of universal values, fair
competition and human skills. However, it soon became apparent that athletic
meetings may also serve as an effective political, sociological and marketing
tool, given their enormous potential to communicate messages to a mass
audience. Sports mega-events, such as the Olympic Games and the soccer World
Cup, are now a powerful business machine, fueled by modern media and generating
huge revenues. At the heart of this phenomenon are athletes who can derive
significant benefits from participating in the sports events. The types of
income that the players receive from competitive sports, and related tax
implications, are the most complex and diverse in the case of international
events involving numerous athletes from various countries.[1]

17 of the OECD Model Tax Convention on Income and on Capital adopted by the
Organisation for Economic Co-operation and Development (OECD) as it read on 22
July 2010 (the “OECD Model”) provides for the taxation of international
athletes. This provision provides a special rule for the allocation of taxing
rights, which only applies to performing artists and sportsmen. With respect to
Article 17(1) of the OECD Model, income derived by a resident of a contracting
state obtained as an entertainer, such as a theatre, motion picture, radio or
television artist, or as a musician or sportsman, from his personal activities
as such exercised in the other contracting state, may be taxed in that other
state. Article 17(2) of the OECD Model states that if the income in respect of
personal activities exercised by an entertainer or sportsman in his capacity as
such accrues not to the entertainer or sportsman himself but to another person,
then that income, notwithstanding the provisions of articles 7 and 15, may be
taxed in the contracting state in which the activities of the entertainer or
sportsman are exercised.

primary right to tax certain income of athletes falls to the state of
performance of sporting activities (taxing state) even if businesses in some
other states are not performed through a permanent establishment situated
therein, to which income covered by article 17 of the OECD Model may be
attributable. Similarly, income of an athlete who provides services in the form
of employment is taxable in the taxing state, regardless of the length of stay
of the athlete in that country, and regardless of who bears the costs of
remuneration. This means that the 183-day rule resulting from article 15(2) of
the OECD Model does not apply in the case of sportsmen. In their bilateral
relations, most countries use article 17 of the OECD Model when they negotiate
agreements on the avoidance of double taxation. By including an equivalent of
article 17 in a double tax treaty, the source state can protect its taxing
right that often would be excluded in the light of the general principles laid
down in articles 7 and 15 of the OECD Model, due to the fact that sports events
typically do not require a prolonged presence in the state of performance.[2]

consequence of double taxation is to tax certain activities at a higher rate
than similar activity that is located solely within a taxing jurisdiction. This
leads to unnecessary relocation of economic activity in order to lower the
incidence of taxation, or other more objectionable forms of tax avoidance. The
problems that double taxation presents have long been recognized, and with the
growing integration of domestic economics into a world of economy, countries
have undertaken several measures to reduce the problem of double taxation.

17 of the OECD Model allows the taxing state to impose tax in accordance with
national law. This provision does not contain any restrictions regarding the
tax base, tax rate or tax collection forms. Moreover, it lacks the rules on deductibility
of expenditure. All of these elements are left to the national tax laws of the
taxing state. As part of its internal system of tax on personal income, the
country may also waive the right to tax athletes at source or design friendly
tax regimes for particular sporting events. In the light of article 17, the
residence state of the athlete also retains the formal right to tax. This
provision constitutes an open distributive rule, which indicates that the
income “may” be taxed in the taxing country, but fails to grant that state the
exclusive right to collect the tax. The issue of taxation of income from sports
activities in the country of residence thus remains open, which means that if
the taxing state grants certain tax exemptions for athletes, and the state of
residence exempts income from tax under national law or an agreement on the
avoidance of double taxation, it may result in double non-taxation. If both
states use their taxing rights, the necessity to grant the exemption by the
residence state or permit the deduction of the tax paid at source from tax
payable in the country of residence depends on article 23A or 23B of the OECD
Model. These regulations give rise to numerous problems of interpretation and
practical difficulties even in the case of cross-border activities of
individual athletes, and international multi-participant sports competition
raises doubts that call into question the appropriateness of the tax treatment
model proposed by article 17 of the OECD Model, based on unlimited taxation at

the current situation of the taxation of international atheletes as brilliantly
enunciated by the OECD, the writer is convinced that there is a need to review
the OECD Model to ensure that international sports atheletes do not evade
payment of tax either at the taxing state or the state of residence and also
ensure that the international athletes are not subject to unnecessary taxation
and in fact double taxation; hence the goose that lays the golden egg does not

Oluwatobiloba Adesemowo

Tobi is a tax and sports lawyer. He is currently a management
strategist at Lagos Tigers Football Club. He is also a tax associate at SIAO
partners. During his leisure, he loves to research on sports and tax related

[1] Tetlak,
K: “Taxation of International Sports Men” (2004) ISBN 978-90-8722-239-0
available at
[2] Ibid
[3] Ibid.