Public Finance Management

Monaco, nestling on the Mediterranean Riviera between France and Italy, is probably best known to South Africans for two things. First, the fabulously wealthy Albert II, Sovereign Prince of Monaco, is married to a beautiful South African by the name of Charlene Wittstock. Secondly, it is the venue for the Monaco Grand Prix, an annual highlight on the Formula 1 calendar and more particularly because the race-track is actually on and through the city streets of its capital, Monte Carlo. What is perhaps not so well known is that there is no income tax in that country.1

There are about 10 other countries in the world where there is no income tax,2 but one way or another, governments all need money to run the country. Monaco, for example, levies VAT at 19,6%; The Bahamas places heavy duties on imported goods, and so on.3 Ensuring that all the revenue that is collected is managed effectively and efficiently is, of course, a massive task, and that is what our Public Finance Management Act 19994 is all about.

This Act, which falls under the authority of the Minister of Finance, established the National Treasury and the National Revenue Fund (as well as these institutions in the provinces). It sets out provisions for the national and provincial budgets, and also – in particular – the responsibilities of:

  • ‘accounting officers’, in all national and provincial government departments and institutions established by the Constitution – such as the Human Rights Commission, and the Independent Electoral Commission; and
  • ‘accounting authorities’ in the various public entities – such as Eskom, SABC, SAA, etc.
  1. Accounting officers have a wide range of (a) general responsibilities;5 (b) responsibilities relating to budgetary control;6 and (c) responsibilities on financial reporting.7 If any accounting officer wilfully, or in a grossly negligent way, fails to comply with any obligations in these regards, he commits an offence.

  2. Accounting authorities also have a wide range of (a) general responsibilities;8 (b) financial reporting responsibilities;9 and (c) fiduciary duties.10 Similarly, if an accounting authority wilfully, or in a grossly negligent way, fails to comply with any of these provisions, it commits an offence.11

  3. The national and provincial governments may only borrow money, issue guarantees (and indemnities or securities) and enter into any transaction binding a future financial commitment through the Minister of Finance, or a cabinet minister with his approval; or, as the case may be, the provincial MEC for finance. Any other person who purports to do so commits an offence.12

  4. Public entities may only do these things through certain accounting authorities, or (national or provincial) ministers for finance, depending on the public entity involved.13 Any other person who purports to do so commits an offence.14

  1. There is a revenue tax for Monaco corporations if profits are generated outside of Monaco –

  2. See, for example, the list at – ‘Countries with Zero Income Taxes’. 

  3. Ibid. 

  4. As amended; the latest amendment was effected by Act 12 of 2013. 

  5. See Section 38 for the full array. 

  6. See Section 39. 

  7. See Section 40. 

  8. See Section 51 for the full array. 

  9. See Section 55. 

  10. See Section 50 . 

  11. Section 86(2). 

  12. Section 86(3) read with section 66(2). 

  13. See Section 66(3) for the permutations. 

  14. Section 86(3) read with section 66(3).