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Foreign soccer players to be taxed

Want Mr Messi in your local pizza advert? SARS will tax him and make sure you get them the money...

18 May 2010 · Staff Writer

In the midst of complaints from aspiring entrepreneurs, it has been revealed that there is at least one local institution that will benefit a great deal from South Africa hosting the 2010 FIFA World Cup. The South African Revenue Service (SARS) could pocket some cash from foreign players during the tourney.

SARS were kind enough to grant certain tax concessions on goods and services that are needed for hosting the tournament, but international soccer stars will not be exempt from tax and certain measures have been implemented to ensure that these taxes are collected.

Typically, South Africa taxes its non-residents on a source basis. That means receipts from sources within the borders of the country are subject to tax.

Ultimately, that means earnings received by foreign players for activities they perform during their stay in SA will be subject to tax. Want Mr Messi in your local pizza advert? SARS will tax him and make sure you get them the money.

Foreign rugby and cricket players have previously avoided paying tax on their local earnings during World Cups, but according to the government department tax collecting problems have been rectified and Di Seccombe of audit, tax and advisory firm Mazars said SARS will be collecting in 2010.

The tax legislation now puts the obligation on any South African resident who is paying a foreign sportsman taking part in a "specified activity" to withhold tax at a rate of 15%. So, if you happen to find yourself doing deals with Didier Drogba or Alex Song - you will have to tax them on it.

"A 'specified activity' is defined in the Income Tax Act as any personal activity undertaken by the foreign sportsperson in South Africa, whether alone or with other people," said Seccombe.

In simple terms that means that any sort of activity that all the foreign soccer cronies might generate an income from, will be taxed.

"Any South African resident failing to withhold the correct amount of tax and pay it over to Sars within 30 days will find themselves personally liable for the taxes owing. Theoretically, the SA resident will then need to recover the taxes paid from the foreign sportsperson."

This echoes the sentiments of lawyer Pierre de Vos who last week said that the economic benefits of the World Cup will not be as high as people had hoped, not for the man on the street anyway...

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