RIO DE JANEIRO | 2016

Finance 7
third parties resident in brazil third parties resident abroad
Capital taxes not applicable not applicable
Income taxes
Value
added taxes
Sales taxes
With
holding taxes
Company income taxes -
applicable
Individual income taxes -
applicable
Applicable depending
on the transaction
Applicable depending
on the transaction
Applicable to transactions
originating in Brazil for
beneficiaries domiciled
outside Brazil
Company income taxes -
not applicable
Individual income taxes -
not applicable
Applicable depending
on the transaction
Applicable depending
on the transaction
Applicable to transactions
originating in Brazil for
beneficiaries domiciled
outside Brazil
While as a general rule, payments related to television rights or
marketing rights are subject to taxation, the following will apply
to the Rio 2016 Games, depending on the source of the payment
and the domicile of the beneficiary:
• Payments made by third parties resident in Brazil in relation to
2016 Games television or marketing rights to:
- Rio 2016 Organizing Committee
Payments made by third parties resident in Brazil to
Rio 2016 in connection with its activities related to the
organization of the Olympic and Paralympic Games (as
described in its articles of association) will not be subject
to taxes of any nature
- the IOC
the payment of royalties and television rights to the IOC will
be exempt from withholding and service importation taxes.
• Payments made by third parties resident abroad in relation to
2016 Games television or marketing rights to:
- Rio 2016 Organizing Committee
the payments made by third parties resident abroad to Rio
2016, in Brazil, will be exempt from income tax or sales tax
- the IOC
the payments made by third parties resident outside Brazil
to the IOC, also located abroad, will not be subject to taxes
in Brazil as long as they are not related to capital gains
(profits derived) on the disposal of assets located in Brazil.
7.5.4 no TaXes LeVied on ioc PaYMenTs
the payment of royalties by Rio 2016 to the IOC will be exempt
from withholding taxes and service importantion taxes.
7.6 BudGeT FraMework
REALIStIC AnD ADEqUAtE BUDGEtS
the OCOG and non-OCOG budgets have been prepared on
the basis of prevailing economic conditions in 2008, taking into
account the effects of inflation and projected foreign currency
movements through to 2016.
A number of guiding principles underpin the budget forecasts:
• All budget line items are based on market pricing, realistic
quotations and sustainable budget assumptions
• Conservative revenue assumptions have been used, delivering
considerable upside potential
• Working closely with the three levels of Government, OCOG
and non-OCOG responsibilities have been clearly differentiated,
minimizing the risk of omission or duplication of data
• the Rio 2016 finance team has a complete understanding of
value-in-kind (VIK) valuation and accounting and its critical
role in achieving and managing a balanced budget for both
revenue and expense targets. Accordingly IOC advice on tOP
sponsorship VIK income has been applied to the relevant
expense categories
• Similarly, local sponsorship VIK income opportunities have
been aligned with the corresponding expenditure budget.
Rio 2016 local sponsorship revenues are conservative and
there is a potential upside in this item
• An overall contingency of 10% of total expenditure has been
provided, with the exception of the Games overlay budget
for which a specific additional contingency of 5% is allowed,
in addition to the 10%. this wil cover inevitable market
fluctuations and fluid planning assumptions as the budget
evolves towards Games-time
• finally, the budget is reflective of the Rio 2016 vision to
establish and enhance the Olympic and Paralympic spirit for
athletes, the Games family, the media and the general public
by presenting a spectacle of harmony, victory and world class
athletic competition.
All financial data presented in the budget is based on Rio
2016 operational assumptions. these assumptions have been
tested by conducting comparative analysis with information
from recent Olympic and Paralympic Games, the Rio 2007 Pan
American Games and the Rio 2016 Applicant Phase budget.
A forward-looking approach has enabled Rio 2016 to create
an accurate and solid base budget for the 2016 Olympic and
Paralympic Games, recognizing that the budget will be a dynamic
forecasting tool that will evolve as detailed planning is undertaken.
for Rio 2016, the focus has been on achieving a balanced budget,
inclusive of an appropriate contingency reserve. the non-OCOG
budget reflects the overall scope of facilities, Government
services and support, as provided in the guarantees.
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