South Africa: Retrospective law changes
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

South Africa: Retrospective law changes

dachs.jpg

Peter Dachs

The Taxation Laws Amendment Act 2012 contains various legislative amendments to the Income Tax Act which have retrospective effect. There is a general presumption in South African law that legislation is not intended to operate retroactively, or with retrospective effect, because to hold otherwise might cause great injustice to the individual.

The presumption applies equally to two different forms of retrospectivity:

  • The relevant Act might provide that at some past date the law shall be taken to have been something other than in fact it was at the time; and

  • The relevant Act might apply to transactions that were concluded before the legislation coming into force, thereby affecting vested rights and obligations.

Under South Africa's previous constitutional dispensation, which was based on the principle of the sovereignty of Parliament, the courts could make limited use of the doctrine of the rule of law as a means of controlling the exercise of public power, especially when such exercise of power emanated from Parliament itself.

By contrast, the rule of law is specifically declared by the 1996 Constitution to be one of the foundational values of the new constitutional order in South Africa.

In Pharmaceutical Manufacturers Association of SA and Another: In re ex parte President of the Republic of South Africa and Others 2000, the court made it clear that the rule of law embraces the idea that legislation should not be retrospective in its operation. In particular it stated as follows:

"The scope of the rule of law is broad. ... [It] embraces some internal qualities of all public law: that it should be certain, that is ascertainable in advance so as to be predictable and not retrospective in its operation; and that it be applied equally, without unjustifiable differentiation."

One of the principles of the rule of law is that laws should not operate with retrospective effect because such retrospectivity can have an unfairly detrimental impact on the vested rights and obligations of persons who organised their affairs and arranged their transactions in accordance with what the law required at the time of such conduct. The rule of law requires that persons should be able to know what the law requires, so that they can make their conduct conform to the requirements of the law.

Peter Dachs (pdachs@ens.co.za)

ENS Taxand

Tel: +27 21 410 2500

Fax: +27 21 410 2555

Website: www.ens.co.za

more across site & bottom lb ros

More from across our site

Proposed regulations on corporate excise tax pose challenges on different fronts, experts tell ITR
The finalists for the 13th annual awards have been revealed
Mazars needs to do all it can to capitalise on TP as a growth area, ex-Deloitte TP director Jeremy Brown has told ITR
Sanjay Sanghvi and Raghav Bajaj of Khaitan & Co provide a practical guide for foreign investors looking to capitalise on Indian’s investment potential
The newly launched Tax Responsibility and Transparency Index will assess the ethicality of companies’ tax practices against global standards and regulations
The reported warning follows EY accumulating extra debt to deal with the costs of its failed Project Everest
Law firms that pay close attention to their client relationships are more likely to win repeat work, according to a survey of nearly 29,000 in-house counsel
Paul Griggs, the firm’s inbound US senior partner, will reverse a move by the incumbent leader; in other news, RSM has announced its new CEO
The EMEA research period is open until May 31
Luis Coronado suggests companies should embrace technology to assist with TP data reporting, as the ‘big four’ firm unveils a TP survey of over 1,000 professionals
Gift this article