The response by South Africa’s Reserve Bank to the appeal by billionaire IT developer (and first private astronaut in outer space) Mark Shuttleworth against a R200 million exit charge imposed on his export of capital to the Isle of Man from South Africa was today lodged at the Supreme Court of Appeal.
Shuttleworth had initially paid the fee, but subsequently challenged its constitutionality and sought restitution.
The High Court in Pretoria had dismissed an attempt by Shuttleworth to set aside the fee and to claim its repayment, but in doing so held provisions of South Africa’s Currency and Exchanges Act, 1933 and Regulations unconstitutional. The Reserve Bank has cross-appealed those findings.
In its written argument the Reserve Bank contends that the imposition of the levy was authorised in law. The Minister of Finance was entitled to impose conditions for the export of capital, and the 10% fee was such a condition. It was a decision by the Minister, not by the Reserve Bank itself, and not ad hoc but in terms applicable to any export of capital above a stated level. The Minister did not, as Shuttleworth claims, fetter his discretion; he made a policy decision regarding the extent to which exchange control restrictions should be relaxed. The Reserve Bank implemented the decision in accordance with law.
The Reserve Bank also argues that the exit level was not (as contended) an impermissible exercise of fiscal power. Its purpose (particularly in the period of international instability triggered in 2008) was to control capital outflows and promote macroeconomic growth, not to raise revenue.
Jeremy Gauntlett SC was instructed by Knowles Husain Inc, Johannesburg for the Reserve Bank.