Vat Act section declared invalid as court finds it gives finance minister too much power

Finance Minister Enoch Godongwana. Picture: Gallo Images/Die Burger/Jaco Marais The Western Cape High Court in Cape Town has declared Section 7(4) of the value-added tax (Vat) Act unconstitutional and invalid in a judgment handed down in favour of the Democratic Alliance (DA). The DA brought the application last year as part of a legal challenge to Section 7(4), which allows the finance minister to change the Vat rate – currently at 15% – through an announcement in the national budget.

Under the provision, the new rate takes effect immediately and remains in force for up to 12 months while Parliament completes the full budget legislative process. The political party approached the court amid a dispute over a proposedVat increase that was ultimately withdrawn. It had argued that Section 7(4) unlawfully granted excessive power to the finance minister and asked the court to declare it invalid.

The DA also sought declaratory relief related to the minister’s 12 March 2025 budget announcement proposing a 1% Vat increase over two years to a rate of 16%. Finance minister Enoch Godongwana and outgoing South African Revenue Service (Sars) commissioner Edward Kieswetter opposed the application. During hearings in late January 2026, the DA argued that the Constitution gives Parliament the exclusive power to impose or change national taxes.

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The party said Section 7(4) effectively gives this power to the finance minister by allowing him to increase or decrease the VAT rate. According to the DA, this type of power cannot be delegated to the executive.

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