For the next five weeks get used to Sepp Blatter being your president and Jacob Zuma sitting on the bench as a bit-player whose government is legally bound to perform the international football federation’s every bidding. FIFA’s grip on South Africa was cemented with 17 key guarantees the government had to agree to in order to host the world’s biggest sporting event. A senior government official said: “FIFA are a bunch of thugs. Not even the UN expects you to sign away your tax base. These mafiosos do.” The South African Revenue Service (SARS) has been forced to accede to an extraordinary “tax bubble” around “FIFA-designated sites” which exempts FIFA, its subsidiaries, and foreign football associations from paying income tax, customs duties, and value-added tax (VAT).
As a consequence South Africa, which has already spent R63 billion, will stand to lose tens or possibly hundreds of millions of rand in potential revenue. According to a document compiled by SARS, by the end of April R613 million worth of goods had been imported into South Africa for the tournament. Rebates of R118 million were paid out on those imports in line with special tax measures for the World Cup. The National Treasury says it is unable to provide estimates of the amount of foreign currency brought into and taken out of SA, but said one of the guarantees was “unrestricted import and export”.
Some of FIFA’s commercial affiliates, licensees, host broadcasters, broadcast rights agencies, merchandise partners, and service providers will not pay taxes on the profits they make during the World Cup. But VAT will be paid on ticket sales and foreign-based soccer players will be taxed on income they receive for playing in the tournament. Hospital beds, intensive care units, and ambulances have been reserved for FIFA and its foreign visitors. More than R700 million has been spent readying emergency medical services and numerous state-of-the-art medical centres, ambulances and rescue vehicles which have been kept under lock and key for exclusive use during the 30-day tournament.
SAFA has also had to provide FIFA with two private jets, two limousines, 300 cars, half a dozen buses, and “chauffeurs who speak fluent English and are thoroughly familiar with the area”. FIFA has hit paydirt. The money is rolling into its Swiss bank accounts and FIFA secretary-general, Jerome Valcke, boasted this week that “we have increased our income by 50% since 2006 in Germany to 2010 in South Africa”. FIFA – a registered “not-for-profit” organisation – has banked a record R25 billion in media and marketing revenues. In March, the Swiss parliament upheld FIFA’s tax-free status in Switzerland. The World Cup is expected to contribute an additional 0.5% to the country’s gross domestic product.
But Dr Udesh Pillay, the executive director of the Human Sciences Research Council’s Centre for Service Delivery, was recently quoted as saying that the country’s expenditure on the World Cup accounts for 6.4% of the 2010/11 GDP. SARS spokesperson, Adrian Lackay, said: “From the perspective of what we spent as a country and from what the country stands to make in terms of revenue and profits it is almost negligible. “Our approach to the World Cup has been that it was never going to be a revenue-raising exercise. Certainly it would be wrong to view the World Cup as a significant contributor in itself. The concessions we had to give to FIFA are simply too demanding and overwhelming for us to have material monetary benefits.”
*The writers are: Julian Rademeyer, Chandre Prince and Anna-Maria Lombard.
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