South Africa-born entrepreneur Mark Shuttleworth has been awarded R250m plus the interest on it by the court of appeal following a lengthy legal battle over exchange control levies. Shuttleworth, who moved from South Africa overseas, paid this levy when he moved his R2.5bn fortune overseas.
Shuttleworth in 2009 decided to take the rest of his capital with him, and for doing so the South African Reserve Bank slapped him with a R250 million levy. This levy was imposed on him by the High Court in Pretoria last July to get his assets out of the country. He apposed this and lost.
He then took the matter to the Supreme Court of Appeal , who heard his case at the end of August 2014.
The Supreme Court of Appeal (SCA) has now ruled that the Reserve Bank has to repay the R250 million to Shuttleworth. The key part of the judgement reads:
The SCA held that a founding principle of Parliamentary democracy is that there should be no taxation without representation and that the executive branch of government should not itself be entitled to raise revenue but should rather be dependent on the taxing power of Parliament. The Court stated that the levy raised revenue for the State in that it brought in ten per cent of the value of any capital in excess of R750 000 exported out of the country, into the National Revenue Fund. Whilst in force, it raised approximately R2.9 billion. The SCA found therefore that the levy thus fell within the category of ‘taxes, levies or duties’ contemplated by sections 75 and 77 of the Constitution.
As part of the judgement order, the SCA ruled that “The Reserve Bank is ordered to repay the applicant the amount of R250 474 893, 50 with interest at the prescribed rate from 13 April 2012 to date of payment.”
“By paying under protest, according to the SCA, Shuttleworth sought to convey that the payment was not a voluntary one and that he reserved the right to seek to reverse that payment. The Court accordingly set aside the decision of the Reserve Bank to impose the ten per cent levy.”
This judgement opens the treasury up to the potential that hundreds of similar cases by businesses and individuals who’ve had similar levies imposed in the past will now sue to have their money returned. The state coffers have been swelled by around R2.9bn over the period which the 10% levy on all expatriation of money over R750 000 has been in place, all of which may have to be paid back.
Read the full Judgement HERE