Hosting the 2010 World Cup: What does it take?

The 2010 FIFA World Cup fever in SA is high and I am compelled to comment on some legislative and economic aspects.  

South Africa will be the first African nation to host the world cup after the country won the all-African bidding process, beating Morocco and Egypt. 

In preparation for the world cup, the South African Government passed a comprehensive Act of Parliament termed the Special Measures Act of 2006, allowing the national state departments to mobilize and fully meet the 17 guarantees contracted by FIFA.  In addition the country has spent billions on infrastructure projects, transport, security, communication etc.

The newly mandated legislative environment provides assurances on:

• entry and exit permits by the Ministry of Home Affairs
• media centre(s) by the Ministry of Communications
• work permits by the Ministry of Home Affairs
• transport by the Ministry of Transport
• customs duties and taxes by the Ministry of Finance
• immigration, customs, check-in procedures by the Ministry of Home Affairs
• other taxes, duties and levies by the Ministry of Finance
• pricing policy by the Ministry of Environmental Affairs and Tourism
• safety and security by the Ministry of Safety and Security
• FIFA’s ownership of media and marketing rights by the Ministry of Communications and the Ministry of Trade and Industry
• bank and foreign-exchange operations by the Ministry of Finance
• exploitation of marketing rights by the Ministry of Trade and Industry
• telecommunications and information technology by the Ministry of Communications
• indemnity by the Ministry of Justice and Constitutional Development
• International Broadcast Centre by the Ministry of Communications
• national anthems and flags by the Ministry of Foreign Affairs
• medical care by the Ministry of Health. 

The trade guarantees by the South African government include intellectual property rights through the amendment of the Merchandise Marks Trade Act 1941. However, there have already been complaints regarding counterfeits and the International Authentication Association, expects that FIFA official suppliers may loose millions.

On taxes; FIFA, a Zurich based Association governed by Swiss law has been granted full tax exemption by the SA government.  The SA tax waiver termed a “tax bubble” , applies to custom duties, taxes, costs and levies on the import and subsequent export of goods belonging to the FIFA delegation, its commercial affiliates, the broadcast right holders, the media and spectators travelling to South Africa for the 2010 World Cup. However foreign soccer payers will reportedly not be exempt from the standard 15% tax to the South African Revenue Service and ticket sales will have 14% VAT applied.

FIFA , has been referred to as a charity by the International Tax Association, and recently was the subject of debate in the Swiss Parliament following a proposal to terminate FIFA’s tax free status in Switzerland. 

Meanwhile the Brazilian government, which has already been awarded the opportunity to host the 2014 World Cup, has reportedly agreed that FIFA and its partners can be exempt from taxes on any goods and services related to the tournament for five years; from January 2011 until the end of 2015.