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Sun International and Peermont Win Tax Case Against North West Provincial Government

The Constitutional Court has ruled that the North West provincial government illegally raised levies on casino operators Sun International and Peermont.

The court, in its judgment, stated that the North West Economic Development MEC had no authority to impose tax on the gambling industry.

The court ruled that Mosenogi lacked the power to enforce a tax on the gambling industry, as it falls under the jurisdiction of the national government.

Additionally, it determined that the fees imposed were not meant for regulatory purposes but rather served as a means of generating revenue for the province. Consequently, the court deemed the North West Gambling Act, which granted authority to the MEC, unconstitutional.

Judge Tati Makgoka of the Constitutional Court delivered the majority decision, with concurrence from Judges Raymond Zondo, Jody Kollapen, Mbuyiseli Madlanga, Steven Majiedt, Sulet Potterill, Owen Rogers, Leona Theron, and Acting Justice Van Zyl.

The judgment upheld the High Court of Mahikeng’s declaration of the North West Gambling Act’s constitutional invalidity, which applied to the sections that purported to give the North West Province Member of the Executive Council (MEC) for Economic Development, Environment, Conservation, and Tourism the right to impose gambling levies as a tax as allowed by the Constitution. It stated that as of January 23, 2020, the declaration of invalidity was in effect.

Read Also: Parliamentarians Propose a Fixed Gross Gaming Revenue Taxation Rate in Kenya

The two operators were awarded the difference between the gambling levies they paid under a regulation of the North West Gambling Regulations 2002 from January 23, 2020, to the date of the judgment and the gambling levies that would have been payable during that period had the regulation not been amended. Sun International Peermont North West Provincial Government

The North West provincial government has since been ordered by the court to reimburse casino operators, including Sun International and Peermont, with millions of rand that were paid as gambling levies under protest since 2022. This comes after the North West MEC of economic development, Kenetswe Mosenogi, announced an increase in the levies. The money was ordered to be paid by the MECs for Economic Development, Environment, Conservation, and Tourism, and Provincial Treasury.

In addition, MECs were mandated to pay interest at the specified rate on the gaming levies that the two corporations had already paid.

Further, the court ordered the two MECs and the North West provincial government to pay the court expenses incurred by Sun International, Peermont Global, and the Casino Association of South Africa, who filed the suit challenging the legality of the additional charges.

The North West Gambling Act’s authorizing sections were declared unlawful and unconstitutional by the Mahikeng High Court previously due to this application.

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