When SARS first sketched out its new deal for big multinationals, almost no one qualified — and the accountants said so. Now the taxman has listened. In a notice gazetted on Friday, the South African Revenue Service set the entry bar for its new advance pricing agreements at R10-billion in annual revenue, a steep cut from the R50-billion it first proposed.
An advance pricing agreement, or APA, is an upfront deal between a company and one or more tax authorities that locks in how cross-border transactions between related parts of the same group will be taxed. The point is certainty: agree the method in advance and you avoid years of costly disputes and the risk of being taxed twice. It is the kind of thing large, globally spread companies value — but only if they can actually get in the door.
Why R50bn didn't work
That was the whole problem with the first draft. The South African Institute of Chartered Accountants told SARS that a R50-billion revenue bar per taxpayer was "excessively high" and "disconnected from the commercial realities" of the local market. It pointed out that even the country-by-country reporting threshold sits at R10-billion for a whole group, and only about 60 multinational groups in the country clear that. Forvis Mazars called the R50-billion bar "overly restrictive". Very few taxpayers would have qualified, leaving the programme inaccessible to most of the companies actually facing complex transfer-pricing questions.
What it still costs
Getting a lower bar does not make this cheap. A qualifying transaction must still exceed R1-billion for distribution or manufacturing, or R300-million for intragroup services. And companies face a R100,000 pre-application consultation fee plus a R1-million fee to process the application itself.
The regime has been a long time coming — first floated in a 2020 discussion paper, with the enabling law having taken effect on 22 December 2023. SARS says it is starting with a pilot precisely because these cases are specialised and resource-intensive. It now begins as a bilateral-only pilot during 2026, accepting deals involving one other country's tax authority at a time before the programme's scope is widened. The real test is who lines up first.
