SARS has published details of its Advance Pricing Agreement (APA) programme, setting out the objectives, eligibility criteria and application framework for a bilateral pilot due to launch in 2026.
The South African Revenue Service (SARS) has published a dedicated webpage on the implementation of its Advance Pricing Agreement (APA) programme, outlining the objectives, benefits and planned pilot phase as the authority prepares to launch the initiative in 2026.
The APA programme is designed to provide upfront tax certainty for qualifying cross-border related-party transactions by allowing taxpayers and SARS to agree in advance on the transfer-pricing approach that will apply to specified transactions. SARS said taxpayers and stakeholders should use the new webpage to stay informed as implementation progresses.
An APA is a binding agreement between SARS and a taxpayer that establishes the transfer-pricing method, key assumptions and terms that will apply to specific international transactions within a multinational group for an agreed period. Where an APA applies, both parties have certainty on how the covered transactions will be assessed for transfer pricing, subject to the agreed terms and ongoing compliance requirements.
Pilot phase to begin in 2026
SARS plans to launch the APA pilot phase in 2026. During the pilot, the authority will accept bilateral APA applications only, reflecting a phased implementation approach intended to build experience before expanding the programme’s scope.
The authority said the programme is aimed at taxpayers in multinational groups with qualifying cross-border related-party transactions and well-defined transfer-pricing positions that can be assessed against the arm’s length principle.
Interested taxpayers will be invited to review the relevant public notices and use dedicated email channels when the pilot opens.
Application framework
According to SARS, the pilot framework will set out the requirements and procedures covering:
- Eligibility criteria
- Applicable fees
- Pre-application consultations
- Required application content
- Procedures for amending or withdrawing applications
- Criteria for rejecting applications
- Processing protocols
- Finalising APAs
- Annual compliance reporting
- Renewal and termination procedures
- Record-keeping requirements
The APA legislation took effect on 22 December 2023, with SARS noting that implementation through a pilot phase reflects the specialised and resource-intensive nature of APA cases.
Programme aligned with international standards
SARS said the APA programme aligns with international best practice, including the OECD/G20 BEPS Action 14 recommendations on dispute prevention and resolution, and follows guidance from the Davis Tax Committee.
The authority said APAs help prevent transfer-pricing disputes by resolving issues before transactions take place, reducing time spent on audits and dispute resolution while supporting a stable and predictable tax environment for multinational groups.
The programme also complements SARS’s existing advance-tax-rulings framework by extending upfront certainty to qualifying international transactions and supporting the authority’s modernisation efforts through earlier engagement, clearer guidance and greater transparency.
Limited initial scope
SARS said international guidance from the OECD and the United Nations recommends that new APA programmes begin with a limited number of simpler cases. Consistent with that approach, the South African programme will initially focus on a small number of bilateral applications involving simpler transactions before capacity and scope are expanded using lessons from the pilot.
The authority added that the programme is intended to strengthen fairness, certainty and confidence in South Africa’s tax system while supporting legitimate cross-border trade and investment.
