Western Cape High Court declares VAT Act provision allowing finance minister to change VAT rate unconstitutional
The Facts
- The Western Cape High Court declared Section 7(4) of the Value-Added Tax Act 89 of 1991 unconstitutional and invalid.
- The court found the provision improperly allowed the finance minister to change the VAT rate via a budget announcement before Parliament approved the change, amounting to an unconstitutional delegation of legislative power.
- The declaration of invalidity was suspended for 24 months to allow Parliament time to remedy the defect in the law.
- The order of constitutional invalidity requires confirmation by the Constitutional Court before it has force.
- The Democratic Alliance brought the court challenge to Section 7(4) during/after the 2025 budget cycle dispute over proposed VAT changes.
- The DA and EFF publicly welcomed the ruling that the finance minister cannot unilaterally determine the VAT rate.
Context
What part of the VAT law did the court strike down, and what did it allow?
The court declared Section 7(4) of the VAT Act invalid; it had allowed the finance minister to announce a VAT rate change in the national budget and have it take effect before Parliament passed confirming legislation Times LIVE,CapeTown ETC,moonstone.co.za.
Does the ruling take effect immediately?
Not immediately: the High Court suspended its invalidity order for 24 months to give Parliament time to fix the law, and the order must still be confirmed by the Constitutional Court Times LIVE,Jacaranda FM,moonstone.co.za.
Why did the court case arise?
The challenge followed disputes in the 2025 budget cycle after Finance Minister Enoch Godongwana proposed VAT increases; the DA took the matter to court and the proposed increases were later scrapped news24,CapeTown ETC,Democratic Alliance.
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