Tweaks to draft legislation introducing an advance pricing agreement (APA) programme for South Africa have been widely welcomed. The legislation is in line with international trends and gives effect to recommendations made by the Davis Tax Committee. The legislation will create far more certainty around large-scale international transactions that have transfer pricing implications.
Lack of clarity in this complex area has been a major contributor to tax disputes, double taxation, or additional assessments. Tax certainty APAs will provide multinational companies with advance rulings about the position they take in their transfer pricing decisions. This is aimed at avoiding disputes and creating an environment of tax certainty that investors look for before they invest. The APAs will provide rulings on proposed cross-border transactions between groups of companies or related parties