US Senate bill aims to revoke PGA Tour tax exemption after PIF deal 

The PGA Tour has a fresh concern as officials continue to investigate the details of the shock framework agreement with the Public Investment Fund of Saudi Arabia.

The US Senate Finance Committee has now introduced a new federal bill that could threaten the PGA Tour’s tax-exempt status.

As things stand, the American circuit is classified as a 501(c)(6) organisation, which allows tax exemptions for professional sports leagues, chambers of commerce and real estate boards.

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The PGA Tour is the largest sporting institution that still exists in such form as the National Football League (NFL) and Major League Baseball (MLB) have both long since relinquished their tax-emption status.

But under new legislation proposed by Senator Ron Wyden, who chairs the Finance Committee, a modification to the tax code would challenge the PGA Tour’s longstanding exemption.

The bill, which is named the The Sports League Tax-Exempt Status Limitation Act, targets the PGA Tour as it proposes to exclude sports organisations from becoming tax-exempt if their assets exceed $500 million. The Tour’s revenue is comfortably over that threshold.

Senator Wyden’s proposal is clearly in response to the PGA Tour’s controversial deal with Saudi’s sovereign wealth fund.

“Most of America’s big pro sports leagues gave up their tax exemptions voluntarily when their revenues climbed into the stratosphere, and they hadn’t even shamed themselves with Saudi blood money,” Wyden wrote in his statement.

“An organisation that betrays its own word and agrees to become a profit generator for Saudi Arabia’s brutal regime has disqualified itself for a tax exemption.

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“Many of the biggest sovereign wealth funds out there belong to countries that do not have our interests at heart, and there’s no good reason for hardworking American taxpayers to have to subsidise their huge profits.”

It must be stressed that the financial investigation headed by Senator Wyden is different to the inquiry held by the Senate’s Permanent Subcommittee, where PGA Tour members were asked to appear in a hearing to examine the commercial deal with PIF on July 11.

Another key detail is that the proposed so-called merger would create a for-profit entity with funding from PIF.

Meanwhile, Senator Wyden is also looking to make sovereign wealth funds like PIF ineligible for lucrative tax breaks.

A bill entitled “The Ending Tax Breaks for Massive Sovereign Wealth Funds Act” has been proposed to end the investment fund’s exemption from 30 percent withholding tax on payments such as dividends and interest.

Senator Wyden’s statement read: “The Ending Tax Breaks for Massive Sovereign Wealth Funds Act would deny that benefit to funds belonging to countries that have more than $100 billion invested globally.”