VENEZUELA: NEW SPORTS LAW TO AFFECT COMMERCIAL SPONSORSHIP
VENEZUELA: NEW SPORTS LAW TO AFFECT COMMERCIAL SPONSORSHIP A new Venezuelan Sports Law entered into force per 23 August 2011, that is intended to regulate sports sponsorship, its organization and administration. The law deals with physical activities as a public service and sports management as economic activity for social purposes. These sports activities are apart of citizens' fundamental rights and the social duty of the State. Part of the law is an obligatory contribution for companies performing activities in Venezuela of 1% on the annual net income. The contribution is only due by companies whose annual income exceeds VEF 1,520,000 (around USD 350.000), and is not deductible for income tax purposes. Up to 50% of the contribution may be used for by the taxpayer to implement certain sports projects. Another main aspect of the Law is the regulation of public and private commercial sponsorship to sports organizations domiciled in Venezuela. Article 64 states that public and private organizations may commercially sponsor those sports promoting organizations domiciled in Venezuela and duly registered before the National Registry of Sports, Physical Activity and Education as long as they duly inform the National Institute of Sports within 15 working days after the execution of the corresponding agreements. In this regard, it is understood that commercial sponsorship is subject to the approval of the National Institute of Sports, and it will be granted only to those sports promoting organizations registered with this Institute, which considerably limits the commercial sponsorship figures previously not subjected to any kind of Government's control. Several important aspects of the Law are still unfinished and will be ruled by its regulation (which has not yet been passed), for example, the commercial sponsorship for an athlete. Currently, and until the regulation is passed, there is a legal void as to how local or foreign companies willing to commercially sponsor athletes should act, since such is a very common practice in sports related activities. In effect, this new Law appears to grant more control to the State in connection with the sponsorship of sports related activities. This may result in a negative impact on the commercial development since private sponsoring companies will probably reduce their economic support, which is the main source of income for sports institutions and athletes alike.