The South African Revenue Service (“SARS”) is poised for one of the most consequential shifts in its international tax administration in years with the formal rollout of an Advance Pricing Agreement (“APA”) programme, and a targeted recruitment drive designed to strengthen its technical capabilities in transfer pricing (“TP”) and multinational tax matters.
A New Era for Multinational Tax Certainty
APAs are internationally recognised tools that allow a taxpayer and tax authority/(ies) to agree in advance on the TP methodology, assumptions, and pricing outcomes for cross-border related-party transactions, which remains a central issue in TP compliance and a frequent source of dispute between multinational enterprises and tax authorities. Under an APA, pricing methodologies and arm’s length outcomes are negotiated and set for a defined period, reducing uncertainty and costly disputes.
Until now, South Africa lacked a formal APA regime, despite draft legislation and proposals stretching back several years. In 2023, draft legislation to introduce an APA framework was released for public comment as part of the Tax Administration Laws Amendment Bill. This framework is designed to give statutory footing to APAs, including provisions on eligible transactions, methodology, and compliance obligations for taxpayers.
This position has now changed. Amendments to the Income Tax Act have introduced a comprehensive statutory framework for APAs under sections 76A to 76P, formally empowering the Commissioner to enter into APAs with qualifying taxpayers.
With the legal framework now in place, SARS has confirmed that it is moving towards practical implementation of the APA programme with the expectation of accepting APA applications from multinational companies as early as June 2026. This marks a significant shift, signalling that South Africa is ready to better align with international best practice and offer taxpayers a predictable, transparent framework for cross-border pricing arrangements.
Why the APA Rollout Matters
For multinational enterprises, APAs offer predictability and a meaningful reduction in the risk of double taxation arising from TP disputes. By agreeing methodologies, assumptions, and pricing outcomes up front, taxpayers can better forecast tax liabilities and mitigate the risk of protracted rulings or litigation.
For SARS, the APA regime is an instrument not only for certainty but also for strengthened compliance. It demonstrates a shift towards proactive engagement with taxpayers, moving from reactive enforcement to collaboration, where appropriate, while retaining decisive action against non-compliance.
Importantly, the APA rollout is part of a broader strategic agenda at SARS that includes technological upgrades, digitalisation of services, and enhanced data analytics tools (for example, the recent acquisition of TP benchmarking software from Moody’s Analytics to support audit and compliance work).
Key takeaways from TP Minds Africa 2026
In one of the panel discussions at the TP Minds Africa 2026 conference that was held in Johannesburg from 24-25 April 2026, African Tax Authorities from the continent (including SARS) spoke briefly about APAs and some of our key takeaways from that session were the following:
- An APA is a lengthy process and can typically take approximately two to four years to conclude;
- An APA only relates to TP matters and does not have any bearing on other direct or indirect taxes (even those related to the same transaction(s) as the APA);
- An APA only relates to a specific transaction and not to all affected transactions that a taxpayer engages in;
- Due to the relatively costly nature of APAs, taxpayers are encouraged to focus on complex transactions that may be difficult to value;
- Taxpayers are encouraged to allocate sufficient resources to the APA process (i.e., technical, senior individuals who have the authority to enter into those discussions);
- Taxpayers must be prepared to be open with the Tax Authorities and provide as much relevant information as possible.
Strategic Recruitment: Staffing Up for Technical Excellence
Integral to this transition is SARS’ recruitment of highly specialised professionals with deep experience in TP and international tax. Historically, one of the main challenges in introducing a robust APA programme has been the relative scarcity of in-house expertise capable of negotiating complex TP deals.
To address this, SARS secured funding for eight specialist positions within its APA unit. These recruits bring technical skills that are essential for assessing APA applications, negotiating methodology and pricing terms with taxpayers and other tax authorities particularly in the context of bilateral APAs, which are the primary focus of the legislation, and drafting clear guidance to support voluntary compliance.
SARS has also committed to publishing clear APA guidelines and directives, aimed at helping multinational taxpayers understand the scope of affected transactions, eligibility requirements, and the application process, a step that should enhance clarity and confidence in the programme.
Think an APA might be a worthwhile solution for you? RvR has a team of experts ready to guide you with experience of negotiating APAs with other experienced tax authorities including His Majesty’s Revenue and Customs (“HMRC”).
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