SARS has published Issue 4 of its guidance on the mutual agreement procedure, setting out how international tax disputes can be taken to government-level resolution.
The South African Revenue Service (SARS) issued the Guide on Mutual Agreement Procedures (Issue 4) on 23 October 2026. It replaces Issue 3, dated 20 March 2020. The guide explains how the mutual agreement procedure (MAP) lets the competent authorities of contracting jurisdictions work together to settle cross-border tax disputes. SARS said the revision reflects international standards and the changing South African tax environment.
The guide is general guidance only. It is not an “official publication” under section 1(1) of the Tax Administration Act 28 of 2011 (TA Act), and it does not create a binding general ruling or a practice generally prevailing.
Legal basis
Under section 108(1) of the Income Tax Act 58 of 1962, read with section 231 of the Constitution of the Republic of South Africa, 1996, Double Taxation Agreements approved by Parliament and published in the Government Gazette have effect as if they were domestic law. South Africa’s agreements generally follow Article 25 of the OECD Model Tax Convention on Income and on Capital.
South Africa signed the Multilateral Instrument on 7 June 2017 and ratified it on 30 September 2022. It entered into force on 1 January 2023. The competent authority is the Commissioner for SARS, who delegates duties to representatives independent of the auditors who raised the disputed assessments.
When MAP applies
MAP is available where taxation is not in accordance with a treaty, covering both juridical and economic double taxation. Typical cases include:
- Dual residence: individuals or companies treated as resident in both jurisdictions.
- Withholding taxes: tax withheld contrary to treaty exemptions or above treaty rates, where a direct refund is refused.
- Transfer pricing: profit adjustments and attribution involving permanent establishments (Articles 5 and 7) or associated enterprises (Article 9).
- Interpretation: doubts under Article 25(3), including thin capitalisation questions on interest versus dividends.
Access is also open for disputes on treaty anti-abuse rules, such as the Principal Purpose Test.
Time limits and parallel remedies
A taxpayer must show that the action taxed, or probably will tax, contrary to the treaty. A case should generally be presented within three years of the first notification of the action, usually an assessment or audit finalisation letter. Section 99(1) of the TA Act limits reduced assessments to three years from the original assessment, unless sections 99(3) or 99(4) apply. A longer treaty period prevails.
Objections, Alternative Dispute Resolution and court appeals can run alongside MAP. However, MAP cannot override a domestic court decision, and a settlement under section 144 of the TA Act closes access to it.
Making a request
Requests must be in writing and in English, with full factual and legal analysis. They must include taxpayer and representative details, the treaty and articles invoked, and amounts in both currencies. They must also state whether the matter has gone to another authority, a court or an advance tax ruling. Transfer pricing cases require extra material, including benchmarking studies and intercompany agreements.
Transfer pricing requests go to [email protected] and all other cases to [email protected]. Information exchanged is protected by Article 26 of the treaty and Chapter 6 of the TA Act.
Outcomes and related matters
SARS may grant unilateral relief where the objection is justified and arises from domestic measures. Otherwise, it opens bilateral talks with the foreign competent authority, aiming to conclude within an average of 24 months. Taxpayers are told of any proposed agreement in writing and may accept it or object. If accepted, SARS issues reduced assessments or refunds, and penalties and interest are adjusted in proportion.
Filing MAP does not suspend the obligation to pay tax. Taxpayers must apply separately for suspension of payment under section 164 of the TA Act. A pilot Advance Pricing Arrangement programme began on 1 September 2026 and operates separately from MAP. South Africa has not committed to mandatory binding MAP arbitration, though limited clauses exist in its treaties with Canada, the Netherlands and Switzerland.
Taxpayers should consult the full guide on the SARS website before lodging a request.
