New Transfer Pricing Certainty and What You Need to Know.

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Your multinational client has been pricing transactions between related entities across borders and hoping SARS agrees. That uncertainty has a cost, in audit risk, management time, and sleepless nights before year-end.

SARS has just launched a dedicated programme to fix that. The Advance Pricing Agreement (APA) programme went live on the SARS website on 17 July 2026, and the pilot phase is planned to begin in 2026. For the right clients, this is a significant development. For practitioners advising multinationals, it is a change worth understanding now.

What an APA Actually Is

An Advance Pricing Agreement is a binding agreement between SARS and a taxpayer that confirms, upfront, the transfer pricing method and terms that SARS will apply to specific cross-border related-party transactions for an agreed period. You agree the approach before the transactions happen. SARS commits to that approach. The uncertainty is removed.

Transfer pricing sits at the heart of how related companies within multinational groups price their cross-border transactions, and getting it wrong exposes clients to SARS adjustments under section 31 of the Income Tax Act. An APA eliminates that exposure for covered transactions, provided the agreed terms are followed.

The alternative, as it was made clear in a recent court case is years of disputes, shifting benchmarking arguments, and court proceedings (read here: SARS Lost This Transfer Pricing Case. Here Is Why It Matters). The case dragged back to the 2011 tax year. An APA prevents that kind of retrospective escalation entirely.

What SARS Has Published

The APA programme aligns with international best practice, including OECD/G20 BEPS Action 14 recommendations on dispute prevention and resolution, and follows guidance from the Davis Tax Committee.

The APA legislation took effect on 22 December 2023. SARS published six draft public notices for comment in April 2026, covering eligibility criteria, fees, pre-application consultations, application content requirements, processing protocols, and the procedures for amending, withdrawing, or renewing an APA. The comment period has now closed.

The six draft notices were issued under sections 76C, 76D, 76I(b), 76J(1), 76J(3), and 76P of the Income Tax Act, and an explanatory note was published alongside them. They are available on the SARS APA website under Draft Documents for Public Comment (due date expired).

What the Pilot Covers and Who Qualifies

The pilot phase is limited and intentional. SARS will accept bilateral APA applications only during the pilot phase, limiting the pilot to a small number of applications and focusing on simpler transactions.

A bilateral APA involves SARS and the tax authority of another country, both agreeing on the transfer pricing approach for the covered transactions. This protects against double taxation, where both tax authorities might otherwise make conflicting adjustments.

Suitable applicants are taxpayers in multinational groups with cross-border related-party transactions and well-defined transfer-pricing positions that can be assessed against the arm's length principle. Unilateral APAs (involving only SARS, without the other country's tax authority) are not available in the pilot. Multilateral APAs (covering more than two jurisdictions) are also excluded for now. SARS intends to expand capacity and scope based on lessons learned during the pilot. sars

What the Process Looks Like

The draft notices set out a structured process covering pre-application consultations, required application content, processing protocols, annual compliance reporting, renewal, termination, and record-keeping requirements,

The APA programme complements SARS's existing advance-tax-rulings framework by extending upfront certainty to qualifying international transactions. In practical terms, a taxpayer interested in applying would first engage SARS through a pre-application consultation before filing a formal application. SARS would then assess the application against the eligibility criteria, negotiate the agreed transfer pricing method and key assumptions, and formalise the APA for a specified period. Annual compliance reporting would apply throughout the APA's term to confirm that the agreed terms continue to be met.

Why This Matters for Your Practice

For practitioners advising large businesses or groups with South African operations and cross-border related-party transactions, the APA programme is worth tracking closely.

Transfer pricing disputes are expensive. As illustrated in the BASF case, they can span over a decade, involve shifting methodologies, and generate significant uncertainty for both the taxpayer and SARS. By resolving transfer-pricing matters before transactions take place, APAs help prevent disputes and reduce time spent on dispute resolution.

For clients with intra-group loans, the APA programme also intersects with the guidance in Section 45 Requirements for Intra-Group Loans, which notes that transfer pricing methodologies compliant with OECD guidelines are now seen as best practice to validate the commercial soundness of intra-group financing arrangements. An APA covering such financing would provide even stronger protection.

The programme is not for every client. It is resource-intensive, the pilot is limited to bilateral cases, and simpler transactions will be prioritised first. But for the right client, the certainty it provides is genuinely valuable.

What to Do Now

Watch the SARS APA page for the formal opening of the pilot phase. When the pilot opens, interested applicants can contact the SARS APA Support Team at APAapplication@sars.gov.za for application enquiries, or at APAenquiries@sars.gov.za for general APA-related queries.

Review the draft public notices now, even though the comment period has passed. They define the eligibility criteria, fees, and application requirements that will govern the pilot, and understanding them early positions your clients to move quickly when the pilot opens.

Read more in our articles published: Making Sense of Transfer Pricing,