The Canadian GP blocked by a tax issue

The Canadian federal government ruled on Monday that Bernie Ecclestone, the big boss of Formula 1, will not benefit from any exception allowing him not to pay Canadian federal taxes. According to Canadian Revenue Minister Jean-Pierre Blackburn, the laws of the Canada Revenue Agency do not fluctuate based on the individual or group. We must be fair to all Canadians. There is no privilege.

The Canadian government nonetheless hopes that an agreement is reached for the Canadian Grand Prix to remain in Montreal, but this must be done according to existing laws: « There will be no deal, » asserted Mr. Blackburn. Current Canadian laws allow certain sporting or cultural events to benefit from tax exemptions if organizers can prove that revenues will not be sufficient.

«If someone, for example, does not want there to be deductions in relation to their project, they must prove in a business plan that there will not be sufficient income to necessitate requesting deductions. » He stated.

On his side, Bernie Ecclestone reportedly asked for written confirmation indicating a full tax exemption, based on old unpaid debts related to the last two Canadian Grand Prix events. Before providing him with the document, the government wants to ensure the matter is legal and customary.

The big boss of Formula 1 wants to ensure he doesn’t pay any taxes in Canada, even though the provinces of Quebec, Ottawa, and Montreal will give him 75 million dollars in subsidies over five years. Bernie Ecclestone is leveraging the fact that his company, *Formula One Management*, is registered in Britain, and he already pays taxes there: « The hosting structure to receive the funds from the three governments still requires work, » summarized a source close to these negotiations. « Ecclestone is looking for an “optimal” way for him to receive these subsidies in Canada. » “Optimal” meaning he doesn’t want to pay taxes in Canada. « He has to pay taxes anyway in Britain. »

Bernie Ecclestone had issued an ultimatum during the Japanese Grand Prix. The F1 boss stated: “When I return from Japan, I will need final answers to all our questions. If I don’t have them, there will be no Grand Prix in Montreal.” Since then, each of the parties involved has continued negotiations and the Canadian government has launched a comprehensive study on the financial impacts of such an event.

The Canadian Finance Minister, Mr. Bachand, in charge of the file, said on Friday that despite everything, he is confident the race would take place in Montreal. There are always complicated elements in a contract with Mr. Ecclestone when lawyers put it on paper. Problems sometimes arise, he added.

After a notable absence in 2009, the Montreal Grand Prix is expected to be back in June 2010.