South Africa: Retrospective law changes

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

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 & shared bottom lb ros

More from across our site

The new practice, which features former ‘big four’ experience, already has over 20 team members
Speakers from companies including Uber and Stripe told the inaugural AI in Tax Forum to brace for impending changes to how advisers work
Authors from Khaitan & Co dissect a ‘welcome’ ruling, which found that the mere existence of a tax benefit would not, by itself, warrant a principal purpose test
Over two-thirds of survey respondents back the continuation of the UK’s digital services tax, research commissioned by the Fair Tax Foundation also found
Given the US/G7 pillar two deal, the OECD is in danger of being replaced by the UN as the leading global tax reform forum
Cinven’s latest investment follows its acquisition of a stake in Grant Thornton UK in December; in other news, a barrister listed by HMRC as a tax avoidance promoter has alleged harassment
CIT base narrowing measures remain more prevalent than increased CIT rates, the report also highlighted
ITR's parent company, LBG, will acquire The Lawyer, a leading news, intelligence and data-driven insight provider for the legal industry, from Centaur Media
KPMG UK’s Graeme Webster and KPMG Meijburg & Co’s Eduard Sporken outline the 20-year evolution of MAPAs, with DEMPE analyses becoming more prevalent and MAPA requirements growing stricter
Rishi Joshi, of the Institute of Chartered Accountants of India, warns of potential judicial overreach as assets are recharacterised to bypass a legislative exclusion
Gift this article