Commissioner for the South African Revenue Service v Medtronic International Trading S.A.R.L

Medtronic International Trading S.A.R.L, a Swiss-incorporated company registered as a VAT vendor in South Africa, suffered extensive losses due to long-running fraud by an employee who submitted false VAT returns to SARS, resulting in understated VAT liabilities between 2004 and 2017. After discovery of the fraud, Medtronic applied for relief under the Voluntary Disclosure Programme (VDP) in terms of the Tax Administration Act 28 of 2011. SARS and Medtronic concluded a VDP agreement in June 2018 under which SARS granted full relief from penalties but required payment of the capital VAT and interest. Medtronic paid the full post-relief amount, including interest. Subsequently, Medtronic requested remission of the interest under s 39(7) of the VAT Act 89 of 1991. SARS refused, asserting that the VDP regime precluded any later remission of interest. Medtronic challenged this refusal in the High Court, which ruled in its favour. SARS appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel, and the High Court’s order requiring SARS to consider Medtronic’s request for remission of interest was upheld.

This judgment clarifies the interaction between the Voluntary Disclosure Programme under the Tax Administration Act and the interest remission provisions of the VAT Act. It confirms that a VDP agreement does not bar a taxpayer from later seeking remission of interest and affirms SARS’s obligation to exercise statutory discretions independently and lawfully. The case is significant for taxpayers seeking relief after voluntary disclosure and for the interpretation of SARS’s powers under overlapping tax statutes.