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 UK’s Labour government has an unpopular prime minister, an unpopular chancellor and not a lot of good options as it prepares to deliver its autumn Budget
Awards
The firms picked up five major awards between them at a gala ceremony held at New York’s prestigious Metropolitan Club
The streaming company’s operating income was $400m below expectations following the dispute; in other news, the OECD has released updates for 25 TP country profiles
Software company Oracle has won the right to have its A$250m dispute with the ATO stayed, paving the way for a mutual agreement procedure
If the US doesn't participate in pillar two then global consensus on the project can’t be a reality, tax academic René Matteotti also suggests
If it gets pillar two right, India may be the ideal country that finds a balance between its global commitments and its national interests, Sameer Sharma argues
As World Tax unveils its much-anticipated rankings for 2026, we focus on EMEA’s top performers in the first of three regional analyses
Firms are spending serious money to expand their tax advisory practices internationally – this proves that the tax practice is no mere sideshow
The controversial deal would ‘preserve the gains achieved under pillar two’, the OECD said; in other news, HMRC outlined its approach to dealing with ‘harmful’ tax advisers
Former EY and Deloitte tax specialists will staff the new operation, which provides the firm with new offices in Tokyo and Osaka
Gift this article