Tax evasion in Mexican soccer under surveillance

Since June of last year, the tax reports of the Santos Laguna club alerted the Tax Administration Service (SAT). According to federal sources, the directors plotted a scheme in 2017 to evade the withholding of income tax (ISR) of 54 million pesos, with which members of the coaching staff and players received payments under the heading of work risk compensation premiumswhen in reality it was about salaries. As happened in 2018 with the Tiburones Rojos del Veracruz, the investigation once again delved into the suspicion of illegal operations in Mexican soccer.

In the case of the Laguna team, the Federal Administrative Court (TFJA) confirmed last Wednesday that the institution intended to deduct 97.6 million pesos in 2014 for the collective labor contract, but the SAT rejected the procedure. Likewise, the TFJA revealed that Santos illegally deducted the amounts issued to other teams for the federative rights of players, which were registered as intangible assetsas well as the existence of a company for searching for talent, whose operation was not proven.

Media action

Through different legal resources, the Guerreros’ board rejected the undue qualification of illegality that is intended to be made in the media and celebrated on Saturday that the magistrates decided to reduce to less than a third the amount that the SAT initially indicated for the 2014 fiscal year. The club reiterates its legitimate belief that it has no debts with the Ministry of Finance (and Public Credit, SHCP), since it has strictly complied with all the precepts, payments and procedures established by current legislation on tax matters.he said in a statement.

In August 2018, the SHCP – through the tax system – opened an investigation against the Tiburones Rojos del Veracruz club for the alleged existence of double contracts and the possibility that this could lead to tax fraud. After resigning from his position without a physical contract, coach Guillermo Vázquez revealed that the businessman and then owner of the sharks, Fidel Kuri, breached a verbal agreement in which the amount (50 thousand pesos) registered with the Mexican Football Federation (FMF) was going to be different from what he would earn in real terms.

They told me that I had to sign a federation contract, apparently, in which a minimum amount appeared and in the club contract the rest that we agreed would appear. That was what we were fighting for.Vázquez said when presenting his case before the FMF Disputes Commission. With this, Liga MX ordered an audit carried out by the British consulting firm Ernst & Young, which later led to the disaffiliation of Veracruz. Affected by non-payments of up to seven months of salary, players and members of the squad began to have clarity about the payment three years later, although only a part.

I do not find the double contracts illegal. I have been in football for many years and I have not seen turbulent negotiations like the ones they tried to mention. In the eagerness to make it newsworthy, they muddied a lot of things.said the former vice president of sports for the Sharks, Mario Trejo.

AMPFro, between debts and payments

For sports authorities, the contract between footballers and clubs is the only valid one and can be used to settle disputes such as non-payment, debts or unilateral terminations. In the case of the second agreement, which is not registered and whose amount is usually higher, professionals can go to civil labour conciliation boards for its resolution.

Founded in 2017, the Mexican Association of Professional Footballers (AMFPro) proposed at an assembly the creation of a collective bargaining agreement to avoid further conflicts due to double contracts. For seven years the project has remained at the same point, despite the different roundtable discussions. In the case of Veracruz, we helped to get the recognition of a second and third agreement that the players had outside, because the one registered with the FMF was already paid. What is in debt are the others.explained to The Day the president of AMFPro, former footballer Álvaro Ortiz.

While Kuri was brought to trial in 2021 for the crime of procedural fraud, other oversight bodies, such as the Federal Economic Competition Commission (Cofece), issued summons since June 2018 to the 17 Liga MX entities for alleged monopolistic practices in player contracts, including Femexfut. Cofece staff went to the offices of each one to validate the diligence with administrative staff.

Gentlemen’s Agreement

As a result of a long review process, the antitrust agency sanctioned the 17 first division clubs, the FMF and eight individuals with 177.6 million pesos in 2021 for colluding in the transfer market. One of the sanctioned behaviors consisted of the segmentation of player transfers, in which the teams artificially inhibited competition for their hiring, with an agreement that unduly restricted their labor mobility, the so-called gentlemen’s agreement.

If a different club was interested in hiring a certain player, it had to necessarily obtain the authorization of the first team that had him in its inventory and often pay a fee for the change. This contradicts AMPFro’s version of the existence of such an agreement even today. Although it was one of the biggest problems in Mexican soccer, we managed to remove it in 2018 through a transfer regulation, which is already public on the federation’s website.Ortiz said. None of the teams sanctioned by Cofece challenged the ruling.

Cruz Azul and other cases

In early 2011, a series of audits at the request of a group of Cruz Azul cooperative members revealed several financial irregularities in the institution. The results of said audit, delivered months earlier to the then president Guillermo Álvarez –now a fugitive from justice–, indicated that the payroll of that team was paid to the players through a company other than the corporate name with which the team appeared in the Liga MX.

In addition to the SAT, the Financial Intelligence Unit (UIF) of the SHCP has since launched several investigations into team executives. Thus, in May 2020, the UIF froze the bank accounts of cooperative officials after detecting irregular transactions of more than 1.3 billion pesos, alleged money laundering schemes and the purchase of players at inflated prices.

The agency’s actions were based on complaints filed in April 2019 by dissidents of the cooperative before the Attorney General’s Office (FGR) against the brothers Guillermo and Alfredo Álvarez Cuevas and Víctor Garcés for fraudulent administration. Just last May, the FGR itself opened a new investigation into Alejandro Irarragorri Gutiérrez, president of the board of directors of Grupo Orlegi (owner of Santos and Atlas) for alleged fraud to the treasury for 17 million 69 thousand 865 pesos.

The crime that the Mexican businessman is accused of does not warrant preventive detention and, if a control judge links him to trial at his next hearing, he would face the process in freedom. The FMF, which has remained on the sidelines (as in most cases) does not consider immediate sanctions in the event that an affiliate becomes involved in a criminal action for tax crimes. A final judgment from a judge is the only recourse to proceed with disaffiliation.