Tax Focus Newsletter

SARS released the Draft Legislation on the Advance Pricing Agreements Programme

Disebo Makhetha,
Ellaine Raboroko
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In 2021, SARS introduced the advance pricing agreement programme in South Africa and provided a model draft legislative framework. 
In this article

The draft legislation on the APA programme was later released in July 2023 through the Tax Administration Laws Amendment Bill, 2023. This bill includes a clause indicating that a chapter will be inserted in the Income Tax Act 58 of 1962 on the APA programme. 

The draft legislation covers the following among others:

  • Definitions of various terms related to APA’s and not included in the Act,
  • Provides requirements of persons who would be eligible to apply for the programme
  • Outlines fees payable by the applicant as well as fees associated with the APA application,
  • Compliance procedures associated with approved APAs,
  • Extension of approved APAs, and
  • APA termination procedure.

The draft legislation's objective

Based on the draft legislation's objective, it is evident that the chapter aims to enhance tax certainty regarding an 'affected transaction' as defined in section 31 of the Act. Additionally, it addresses the prevention of double taxation and the procedures for resolving associated disputes (TALAB, 2023). However, the chapter lacks sufficient guidance on the eligibility criteria for the program.

SARS plans to launch an Advance Pricing Agreement Programme

SARS plans to launch an Advance Pricing Agreement Programme, starting with bilateral applications. They will learn from other jurisdictions and expand to include multilateral applications. It will be interesting to see how SARS treats these agreements, whether like Binding Private Rulings specific to the applicant or Binding General Rulings that apply to all taxpayers. 

Our team of transfer pricing experts at SNG Grant Thornton can ensure compliance with South Africa's transfer pricing laws. Visit our International Tax and Transfer Pricing services for a comprehensive list of services provided by our experts.