Arnaaz Camay, tax director at law firm Baker McKenzie in Johannesburg, wrote in a briefing: “The practice of effecting de facto legal amendments announced by press release, draft legislation or regulations immediately on the announcement or the publication date, despite such amendments not being formally promulgated, is critically referred to as ‘legislation by press release’.”
In a briefing entitled The Perils of Introducing Tax “Legislation by Press Release”, Camay cited the South African minister of finance’s budget speech on 22 February 2017 that announced that the dividend tax rate would be increased from 15% to 20% with immediate effect.
The country’s National Treasury has stated that such action is taken to eliminate an “unintended benefit” or “loophole” and to prevent a so-called “announcement effect”, where taxpayers take preventative action as soon as they become aware of future changes in legislation.
She wrote: “Introducing ‘legislation by press release’ places taxpayers in an impossible position as they are expected to proceed on the basis that these changes will become law, effective as of the announcement date.
“However, taxpayers do not know if they can rely, with certainty, on the introduction of the proposed amendments nor do they know what final form such amendments will take, as generally, the draft legislation undergoes various changes before being finally promulgated by parliament.”