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   Market Date: 25-06-2014   
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Discharge of tax liabilities by a third party as realization of income -

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Monday, April 28, 2014 2:28 PM/Dr. Olumide K. Obayemi, LLM; SJD*




“NETTO, I always talk netto”
---Ruud Gullit, after signing Chelsea contract in 1998


Income represents an increase in wealth recognized for tax purposes upon realization. Thus, the sole question in this paper to examine, the Nigerian taxation laws, the impact of the Dutch superstar, Ruud Gullit’s insistence that Chelsea should pay the tax on Gullit’s salary, upon Gullit’s move from AC Milan to Chelsea in 1998? Gullit’s remuneration was GB£2million in 1998. Under English tax law, Gullit was obligated to pay about GB£450,000 as annual tax on his annual earnings, and thus, if Chelsea were to pay Gullit’s tax liability of GB£450,000.00, it would follow that Gullit’s actual earning would be GB£2,450,000.00, upon which Gullit would be obligated to pay 22.5% tax on the sum total, i.e., GB£551,250.00. This would be same conclusion in Nigeria, as well. The law is that the discharge by a third person of an obligation to him is equivalent to receipt by the person taxed




In Italy, the average football player usually receives his salary “netto”, where the figures for player wages are usually and routinely reported as being after-tax. According to the Italian journal, Gazetto dello Sport’s annual review of player salaries, and while using Daniele De Rossi as a point of reference, the actual reported salary was usually greater than the gross income. De Rossi plays for Roma, and he is the highest paid player in the Italia Series A. De Rossi reports an annual salary of GB£6.5million, but, upon an exhaustive review, De Rossi’s salary should be GB£14million, including basic salary, regional and municipal taxes, loyalty bonus (spread over his current contract) and ‘solidarity’surcharges (a temporary Italian wealth tax).

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Tags: Dr. Olumide K. Obayemi,  LLM,  Ruud Gullit,  AC Milan,  Chelsea,  Nigerian taxation laws,  Dutch superstar,  Dr. Olumide K. Obayemi,  LLM; SJD* , 

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