Shuttleworth loses case
COURT RULES BANK WILL NOT REPAY R250m
ENTREPRENEUR Mark Shuttleworth’s hopes of overturning the exchange control regulations have been dismissed and he will not get back the R250-million he had to pay to take R2.5-billion out of the country.
The Constitutional Court in Johannesburg yesterday upheld an appeal against a Supreme Court of Appeal (SCA) judgment that had ordered the South African Reserve Bank to repay Shuttleworth R250million with interest calculated from April 2012.
Shuttleworth paid this “exit charge ” under protest in 2009 to repatriate R2.5-billion offshore. The minister of finance had imposed the 10% exit charge in 2003 as a condition to export capital exceeding R750 000.
Shuttleworth asked the North Gauteng High Court in Pretoria to set aside the exit charge, but the court dismissed his application in 2013. Last year, the SCA ruled in his favour and ordered the bank to repay the amount with interest.
The SCA, in setting aside the decision to impose the exit charge, held that the charge was a tax which could only be imposed via a “money bill ”, passed by parliament. The court held that the exit charge could not be imposed by a regulation passed by the finance minister.
The exit charge is no longer in place, but the state persisted in its appeal because it was worried it could face multiple claims for about R2.9-billion that was raised through exit charges between 2003 and 2010.
Yesterday, Deputy Chief Justice Dikgang Moseneke, in a judgment in which eight other judges concurred, held that the dominant purpose of the exit charge was not to raise revenue but to discourage the export of capital out of SA and to protect the domestic economy. The finance minister had the right to impose the charge, the court held.
In a dissenting judgment, Judge Johan Froneman said national revenue of any sort must be raised by way of original legislation passed in parliament. He held that the imposition of the exit charge was constitutionally impermissible.