The Western Cape High Court has ruled that Section 7 of the Value-Added Tax Act, which allows the Minister of Finance to change the VAT rate, is unconstitutional and invalid.
The case was brought by the Democratic Alliance following a dispute over a proposed one-percentage-point increase in value-added tax announced by Finance Minister Enoch Godongwana during his 2025 Budget Speech. The proposed increase was later withdrawn.
In its judgment, the court found that the current law permits the finance minister to implement VAT rate adjustments that remain in effect for up to 12 months before Parliament of South Africa decides whether to confirm or reject the change.
The court raised concerns that if Parliament ultimately rejects such a change after the 12-month period, taxpayers would not be reimbursed for the additional VAT already paid.
While the High Court said it does not oppose the delegation of legislative powers to the executive, it expressed particular concern about the year-long delay before parliamentary oversight takes place.
The ruling has been referred to the Constitutional Court of South Africa, which will have the final say on the constitutionality of the provision.