SARS adopts some submissions on the APA programme
Authors: Karen Miller, Carryn Alexander – Webber Wentzel
SARS has released final additional guidance on the Advanced Pricing Agreement (APA) programme in its guide dated 7 August 2026. The guidance updates the conditions for multinationals to participate in the pilot programme.
The pilot programme, which takes effect on 1 September 2026, invites eligible taxpayers to apply and is limited to bilateral or multilateral APAs with countries that have a double tax agreement (DTA) with South Africa. Although the guidance does not require the DTA to be based on the OECD Model Tax Convention, the DTA must include Article 9, which deals with associated enterprises, and Article 25, which provides for the mutual agreement procedure, so that the APA can be negotiated.
A positive change is the reduced acceptance threshold: the eligible turnover requirement has decreased from R50bn to R10bn in the year of assessment immediately before the application is submitted. This aligns with the country-by-country reporting threshold and is a welcome indication that SARS has accepted many of the submissions made.
The programme remains limited to transactions involving the purchase and sale of goods and services, with expected values exceeding R1bn for goods and R300m for services. The updated guidance now also covers both inbound and outbound services, which is a welcome change given that there appeared to be no clear rationale for limiting the programme to inbound services only. However, these thresholds still mean that many multinationals are likely to fall outside the scope of the pilot programme.
The fee structure remains unchanged, although SARS has provided additional guidance on when fees must be paid. The pre-consultation fee of R100 000 remains payable before SARS engages with the other tax authorities. Because this fee, like all APA fees, is non-refundable, it may become a sunk cost if the other tax authorities reject the application. The positive development is that fees above the R1m cost-recovery fee will be charged only if agreed between the taxpayer and SARS and should be limited to additional costs such as travel.
SARS will also consider rolling an APA back to cover up to three consecutive prior years of assessment, provided that doing so does not reduce taxable income or increase assessed losses in those years. This offers taxpayers greater certainty in respect of existing transactions and may help shield those transactions from transfer pricing audits. The guide also provides additional context regarding transactions that have already been audited and in respect of which a taxpayer may seek an APA. Notably, the guidance indicates that an APA may still be available for a transaction under audit until the matter progresses to the objection and appeal stage, that is, the dispute resolution procedures set out in Chapter 9 of the Tax Administration Act. This is a welcome development as it provides taxpayers with an alternative avenue for resolving transfer pricing issues during the earlier stages of an audit.
In addition, the guide leaves open the possibility of obtaining an APA for future years in respect of transactions that have been the subject of a settlement agreement, provided those future years fall outside the scope of that agreement.
Overall, SARS has incorporated several submissions into the updated guidance, many of which improve clarity and create useful dispute resolution alternatives. Although the fees remain high, taxpayers should weigh the cost of an APA application against the uncertainty and potential expense of defending a transfer pricing audit. We recommend that clients considering an APA first test the position with the relevant foreign tax authorities to confirm a strong likelihood that they will engage with SARS, thereby protecting the initial R100000 investment.
