Did Saudi Arabia Charge Taxes on WWE?
In 2018, the World Wrestling Entertainment (WWE) held its first ever ‘Crown Jewel’ event in Saudi Arabia. It was viewed by many as a bold move due to the country’s heavy religious conservatism, as well as its record on human rights. Yet, WWE made the decision due to potential financial opportunities arising from holding a major event in the country.
Part of the deal saw the WWE agreeing to share revenue with Saudi Arabia, including taxes. After all, the Saudi government had invested heavily in the country’s infrastructure to host the event. But did Saudi Arabia actually charge taxes on the WWE?
The answer is yes, they did. According to a report from the Arabian Business Journal, the Saudi government requested the WWE pay taxes before and after the event. And while the specifics of the agreement remain confidential, the Arabian Business Journal claimed the taxes imposed on the WWE for the event would have earned the Saudi government a “significant” amount.
This is not the first time Saudi Arabia has evidenced its willingness to charge taxes. It is a common practice for the Middle Eastern country to impose taxes and fees on foreign companies looking to hold major events in Saudi Arabia. For example, in 2019 Formula One arranged a championship race in Saudi Arabia, where the Saudi government charged a six percent tax rate on the racing team’s revenue.
The main question posed, though, is why would the WWE take on a financial risk to hold an event in Saudi Arabia? Well, apart from the fact it is one of the richest countries in the world, the WWE had a clear opportunity to gain additional brand recognition and tap into the country’s rising wrestling fan base. It was a bold but calculated move that could potentially pay off for the entertainment company.
Furthermore, the event itself was a major success. Not only did it draw the largest live crowd to an international WWE event in a decade, it was also widely viewed on streaming platforms around the world. This helped draw attention to the WWE and the Crown Jewel event, creating a further opportunity for the company to generate income.
The Benefits and Consequences of Taxing Events
Taxing events comes with a range of benefits and consequences. On the one hand, it helps to fill the public coffers with revenue, while on the other it can often lead to criticism from some groups due to it being seen as ‘profiting’ from someone else’s event. This is why there is an element of risk when deciding if an event is profitable enough to justify the taxes imposed.
For example, when the WWE hosted its Crown Jewel event, it faced criticism its decision to hold an event in a country with a questionable record on human rights. The company defended itself by explaining the potential advantages of becoming the first major wrestling promotion to stage an event in Saudi Arabia. Yet, the WWE also faced financial risks due to the taxes imposed.
One way companies attempt to offset the risks of taxes is by negotiating a rate that they feel is fair and reasonable. This often sees companies pushing for tax holidays periods – whereby they don’t have to pay any taxes – or a reduced rate that they have previously agreed upon with the government. The same is true of large-scale events such as the Crown Jewel event. Indeed, the WWE may have agreed on a lower rate than the six percent for Formula One, or even a period of taxes remission.
Government Investment
The taxes imposed on a major event like the WWE Crown Jewel are also beneficial for the host country; money collected is often used to cover the cost of government investment in the infrastructure needed to host the event. For instance, the Saudi government invested heavily in the infrastructure and security at the event. The country also invested a great deal of money into improving its entertainment and culture scene to create an audience for the WWE.
This also created a great opportunity for the Saudi government to attract other major events. And it worked: since the WWE event, the country has held other major entertainment and sporting events. Such events generate additional income for the country, providing additional funds to invest in further infrastructure and other projects.
The Impact of Taxation on the Event
Taxation on the event itself also had an impact on the finances of the WWE itself. After all, any taxes taken had to be taken from the profits the company made on the night. This meant the WWE had to absorb the costs of the taxes imposed and, as such, it had to recoup its money from ticket and merchandise sales.
This is why it is essential for any company or event that holds an event in Saudi Arabia or anywhere else for that matter to ensure they understand the taxation rate and the laws of the country. For the WWE, the decision to host an event in Saudi Arabia was a risk, as it did not know what the taxation rate would be beforehand. It has since then gone on to enter into a new agreement with the country, which now sees it pay taxes, but at a lower rate than it did for the Crown Jewel event.
The Future of Taxation
As Saudi Arabia looks to attract more international events, there is no doubt it will be looking to renegotiate the taxes it charges foreign companies. This is beneficial for the country, but it does come with a mutual responsibility to ensure companies remain adequately protected when making major decisions.
This could mean negotiating a tax holiday period or even a reduced taxes rate so companies can ensure such events still remain profitable. After all, as Saudi Arabia moves towards hosting more developmental events, it will need to keep foreign companies interested in investing in the country. Ultimately, taxation can be a major factor in this process.
The Negotiation Process
Taxation is rarely a straightforward process when it comes to major events such as the Crown Jewel. This is due to the fact both the host country and the company investing have to come to an agreement that they are both happy with. In many cases, this is achieved through negotiation and compromise.
For example, the WWE may have offered to pay a higher tax rate in exchange for a lower tax liability. This would be beneficial for the company as it would save money, while also helping the host country generate additional income. This is why large-scale events like the Crown Jewel are often negotiated, with both parties trying to find a fair and balance solution.
The Benefits and Drawbacks of Taxation
Taxation can have both positive and negative impacts on those involved. From the WWE’s perspective, the company had to calculate the potential rewards and risks of investing in the Crown Jewel event. It knew there was a potential opportunity for it to make money, but it had to ensure the taxes it was liable for would not be outweighed by its costs.
The same is true for the host country. While the government wanted to ensure it is adequately compensated for hosting the event, it also had to ensure its taxation was not going to be seen as too high, or overly burdensome. This is why taxation is often negotiated in such deals, as it helps to ensure both parties get the best deal.
Conclusion
It is obvious that taxes imposed on major events such as the WWE Crown Jewel event play a major role in helping both the host country – in this case, Saudi Arabia – and the companies investing in the event. Negotiation is essential in order to ensure each party gets the best deal. Ultimately, taxation on events can be a positive experience if both parties are willing to find a balance.
