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August 1, 2023
2023-1343

South Africa proposes an Advance Pricing Agreement (APA) program

  • Recently proposed legislation would launch an APA program in South Africa.
  • The APA program will likely begin with a pilot program.
  • Potentially affected taxpayers will want to become familiar with the proposal and underlying Tax Administration publications.

The Draft Tax Administration Laws Amendment Bill, 2023 (Draft TALAB) released on 31 July 2023, sets out South Africa's proposed legislation concerning an APA program. This follows the South African Revenue Service (SARS) discussion paper on an APA program released for public comment in November 2020, the release of a high-level model in February 2021 and draft legislation in December 2021.

An APA program will provide taxpayers with a greater level of certainty when embarking on large-scale international transactions that have transfer pricing implications.

The APA framework, currently contained in Clause 10 of the Draft TALAB, deals with matters such as clarifying who is eligible to apply for APAs, how applications are processed, finalization, extension, and termination of APAs, record keeping, and the SARS Commissioner's power to prescribe procedures and guidelines for implementing the program. Importantly, it provides for consultation with affected treaty partners at key points of the process.

It is anticipated that the APA program will commence with a pilot, only accepting bilateral APA applications.

The pilot will allow for learning from other jurisdictions and the managed expansion of capacity before SARS extends the program to cater to, for example, multilateral APA applications.

More detail will follow in a subsequent publication.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young Advisory Services (Pty) Ltd.

Ernst & Young LLP (United States), Pan African Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

 

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