Shuttleworth repaid R250 million by South African Reserve
In the culmination of a widely followed case, on 1 October 2014
the Supreme Court of Appeal ordered the South African Reserve Bank
(SARB) to repay Mark Shuttleworth over R250 million plus interest.
The money had been levied against Shuttleworth when he applied to
transfer his assets out of the country in 2009. He had emigrated
from South Africa several years before that, and the prevailing
practice at the time was to levy an exit penalty of 10% on any
person who emigrated and wished to transfer more than R750,000 from
South Africa. This exit levy was dropped in 2010, but this was too
late for Shuttleworth as he had already paid the R250 million under
In terms of South Africa's system of exchange control,
approval is required from the SARB before capital can be exported
from the country. Recent regulations by the SARB have included
intellectual property within the ambit of the term
"capital". Shuttleworth's initial case before the
High Court sought to have the whole system of exchange control
declared unlawful and set aside, which many had hoped would pave
the way for freer transfer of tangible and intangible assets across
South Africa's borders. However, the Supreme Court of Appeal
took a much narrower view of the matter and only sought to decide
the issue specific to the case – whether or not the 10% levy
imposed on Shuttleworth's assets was lawful. The Court found it
unnecessary to consider the other attacks by Shuttleworth on the
exchange control system, as they had no impact on the outcome of
his case. The Court warned the lower courts not to engage in
speculative and academic enquiries beyond the scope of the cases
before them, as such findings may have an effect on future disputes
that are yet to crystallise.
The Court characterised the 10% levy as a tax, and because the
SARB had not followed the proper procedure required for
implementing a policy or regulation that imposes a tax, namely
tabling it before Parliament, the levy was held to be unlawful. The
Court referred to the well-known "no taxation without
representation" principle as a founding principle of
Parliamentary democracy in which the executive branch of government
should not itself be entitled to raise revenue but should rather be
dependent on the taxing power of Parliament, which is
democratically accountable to the country's tax-paying
The case did not have nearly as far reaching effects as some had
hoped, and South Africa's Exchange Control system remains in
place for now. But in a bold and astonishing move, Shuttleworth has
reportedly stated that he will commit the entire R250 million into
a trust fund to be used to fight worthy Constitutional challenges
against the government in future. No doubt this is far from the
last word on the matter.
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