The South African Rugby Football Union v Commissioner for the South African Revenue Services

The South African Rugby Football Union (SARFU), through a joint venture registered as a VAT vendor (SARFU RWC 1995), organised the 1995 Rugby World Cup in South Africa under an agreement with Rugby World Cup Limited entities. Up to 50% of match tickets were allocated for overseas sale to the Central Organiser, RWC (Licensing) BV, and the official tour operator. SARFU arranged printing, custody, and distribution of tickets. VAT was paid on the full selling price of overseas tickets amounting to R13,192,900. SARFU claimed a VAT refund, contending that the supply of overseas tickets should have been zero-rated under the Value-Added Tax Act 89 of 1991. The Commissioner refused the refund, and SARFU’s appeal to the Income Tax Special Court failed, prompting a further appeal to the Supreme Court of Appeal.

The appeal was allowed. The order of the court a quo was set aside. The Commissioner was directed to reassess the VAT payable by SARFU RWC 1995 on the supply of services relating to overseas tickets and to refund the balance between the VAT previously paid (R1,569,490.62) and the reassessed amount. Each party was ordered to pay its own costs.

The case clarifies the distinction between supplies of goods and supplies of services for VAT purposes, particularly in complex international commercial arrangements. It confirms that zero-rating provisions are interpreted strictly and that residency for VAT purposes includes entities carrying on enterprises with a fixed place of business in South Africa. The judgment is also significant for confirming that VAT must be calculated on the true value of the consideration for the supply, not on gross receipts unrelated to that supply.