Executive summary

On 7 August 2026, the South African Revenue Service (SARS) published six final notices under sections 76C, 76D, 76I(b), 76J(1), 76J(3) and 76P of the Income Tax Act, No. 58 of 1962 (Income Tax Act), together with its Advance Pricing Agreements — External Guide. The measures operationalize the pilot phase of South Africa's advance pricing agreement (APA) system for double taxation agreement (DTA) APAs. The pilot program deals only with bilateral APAs and is intended to enable SARS to implement the system in a controlled manner, refine its processes and build experience with treaty partners.

Taxpayers may submit requests to participate in the pilot program from 1 September 2026. Access is subject to eligibility thresholds, transaction limitations, tax residence and compliance requirements, treaty-partner participation, prescribed fees and SARS's discretion.

Final subordinate legislation

The six notices published in Government Gazette No. 55152 establish the following elements of the pilot program framework:

• Notice 7788 under section 76C prescribes who is eligible to apply, including the turnover, transaction type, transaction value, residence and tax-compliance requirements, as well as SARS's discretion to accept or reject an application.
• Notice 7787 under section 76D prescribes the pre-application consultation fee, application cost-recovery fee, amendment and extension fees, annual maintenance fee, ancillary costs and interest on late payment.
• Notice 7789 under section 76I(b) prescribes additional circumstances requiring rejection, including a failure to reflect economic reality or substance, lack of commercial substance, certain anti-avoidance or dispute-related issues, material differences from the pre-application information, nonpayment of fees, failure to provide information, nonparticipation by the other competent authority and tax noncompliance.
• Notice 7790 under section 76J(1) prescribes the processing requirements, including a project plan, information gathering, coordination between competent authorities, simultaneous provision of requested information to both competent authorities, a SARS position paper and competent-authority negotiations in which the applicant has no direct role.
• Notice 7791 under section 76J(3) prescribes the information to be included in a preliminary DTA APA, including party and competent-authority details, business and functional information, organizational and financial information, critical assumptions, transaction quantum, transfer pricing method, comparables, arm's-length outcomes, adjustments, duration, compliance-report date and an undertaking regarding amended income tax returns.
• Notice 7792 under section 76P prescribes operational procedures, including English-language requirements, the pre-application consultation process, and the timing of any request for rollback, which would allow the APA's agreed transfer pricing methodology to apply to eligible earlier years of assessment, together with related prescription discussions.

APA definition

An APA determines, in advance of controlled transactions, an appropriate set of criteria for establishing transfer pricing for those transactions over a fixed period. According to the external guide, an APA is intended to promote tax certainty for an affected transaction and to prevent or minimize double taxation and related dispute-resolution procedures.

Eligibility and transaction scope

Applicants and affected transactions must satisfy the following eligibility and scope requirements to participate in the pilot program:

• The applicant must be a party to, or be contemplating entering into, an affected transaction.
• Standalone turnover must have exceeded 10 billion South African rands (ZAR10b) (approximately US$600m) in the year of assessment preceding the year in which the pre-application consultation meeting is requested.
• The applicant must be a South African tax resident and tax compliant as contemplated in section 256(3) of the Tax Administration Act, 2011.
• The affected transaction must relate to distribution, manufacturing or intragroup services.
• For each year covered, the expected transaction value must exceed ZAR1b (approximately US$60m) for distribution or manufacturing, or ZAR300m (approximately US$18m) for intragroup services.
• Financial assistance and transactions that constitute or result in the creation of intangible property are excluded — the guide states that a transaction resulting in the development, enhancement, maintenance or protection of intangible property after accurate delineation is not eligible.

SARS may accept or reject a request or application based on the nature of the transaction, the taxpayer's industry, and available SARS resources.

Fees

The following prescribed fees and related payment obligations apply to the pilot program:

• A nonrefundable ZAR100,000 (approximately US$6,000) pre-application consultation fee is payable within seven days of invoice.
• A ZAR1m (approximately US$60,000) cost-recovery fee applies to processing an application, comprising a ZAR200,000 (approximately US$12,000) deposit and the remaining ZAR800,000 (approximately US$48,000) invoiced in eight equal installments at 90-day intervals.
• Additional fees may apply to amendments, extensions and agreed ancillary costs.
• A ZAR100,000 (approximately US$6,000) annual maintenance fee applies once an APA is concluded or extended.
• Fees are nonrefundable, and interest is charged at the official rate on late payments.

Pre-application and application process

A pre-application consultation request to participate in the pilot program must be emailed to SARS. The prospective applicant must submit a presentation containing the information required by section 76E(3). Once the presentation is received and the pre-application fee is paid, SARS arranges the consultation. If rollback is sought, the request must be made during the consultation, when assessment prescription issues must also be addressed.

If SARS permits the taxpayer to proceed and both competent authorities accept the application for processing, SARS will consult with the applicant and the other competent authority on a project plan. SARS may request information about the multinational enterprise as a whole, conduct functional analysis interviews, engage industry experts and undertake benchmarking and comparable entity analysis. Requested information must be provided to both competent authorities simultaneously. SARS will then prepare its position paper and conduct negotiations with the other competent authority without the applicant's direct participation.

Preliminary APA and compliance

The preliminary APA must state the prescribed party, transaction, business, functional, organizational, financial, accounting, currency, methodology, comparables, critical-assumption, arm's-length, adjustment, duration and compliance information. It must also state that the taxpayer will submit relevant amended income tax returns within 21 days after finalization of the APA, applying the agreed transfer pricing methodology.

An APA may apply for up to five consecutive years of assessment. If requested, SARS may also allow a rollback, which means applying the APA's agreed transfer pricing methodology to up to three consecutive earlier years of assessment ending on the last day of the year of assessment in which SARS receives the APA application, provided this does not result in a cumulative decrease in taxable income or increase in assessed losses for those earlier years. A compliance report is required for each covered year, and taxpayers remain subject to statutory transfer pricing compliance and recordkeeping obligations.

Rejection considerations

SARS may reject an APA application if the prescribed requirements are not met or if any of the additional rejection circumstances apply. These rejection grounds are relevant both when SARS determines whether an application should be accepted for processing and during the subsequent processing of the APA application. In particular, SARS may reject an application if any of the following conditions applies:

• The proposed APA would not reflect the economic reality or substance of the affected transaction.
• The transaction lacks commercial purpose or appears to be tax-motivated.
• The application requires interpretation of anti-avoidance provisions.
• The issue is already subject to specified legislative, dispute-resolution, voluntary disclosure or other SARS processes.
• The application differs materially from information provided at the pre-application stage.
• The taxpayer fails to provide requested information or pay prescribed fees.
• The other competent authority does not agree to participate.
• The taxpayer is not tax compliant.

Before rejecting an application, SARS may request additional supporting information or clarification. If SARS rejects the application, it must inform the taxpayer and explain the reasons.

Effective dates

The six notices and the external guide are effective from 7 August 2026. Each notice applies to DTA APA applications received on or after publication in the Government Gazette. SARS will accept requests to participate in the pilot program from 1 September 2026.

Implications

The pilot program provides a prospective route to transfer pricing certainty for a limited group of large South African taxpayers with recurring, high-value qualifying transactions.

The reduction in the turnover threshold from ZAR50b in the draft framework to a standalone ZAR10b threshold in the final notices significantly broadens the pool of taxpayers that may potentially qualify for participation in the pilot program.

Potential applicants should consider eligibility, transaction suitability, treaty-partner readiness, likely information demands, fees, internal resources and ongoing compliance obligations. Important considerations, based on the published requirements, may include accurate delineation, commercial substance, consistency between contractual terms and conduct and support for the proposed method and critical assumptions.

Affected entities may wish to consult with experienced tax advisors to assess the implications of the pilot framework in light of their circumstances.