SARS is coming after these taxpayers

Tax authorities like SARS are stepping up transfer pricing scrutiny as improved data access, global economic pressures, and revenue constraints drive more assertive tax enforcement.

This is according to the latest annual report on transfer pricing (TP) in Africa, from specialist African TP firm Graphene Economics.

The report, titled ‘Towards operational clarity – TP trends for 2025 and beyond’, combined data from the annual Graphene Economics TP Matters survey with commentary from African and international tax and economic specialists.

While it highlighted several TP-specific developments, its broader conclusions pointed to structural shifts in how African economies approach revenue collection, risk management and business regulation.

The report revealed that, over the past several years, many African tax authorities, including South Africa’s, have deepened their technical capacity.

Thanks to information-sharing and technology advances, they now have unprecedented access to taxpayer information.

Against a backdrop of global uncertainty and regional economic pressures, the report suggested that multinationals should expect elevated scrutiny, more assertive enforcement, and greater emphasis on data quality across the continent.

Global macroeconomic conditions in 2025 have created both opportunities and pressure for cross-border operations.

Inflation is moderating, interest rates are easing, and financing conditions are improving across many African markets.

At the same time, profitability remains under strain due to persistent geopolitical instability, which continues to feed volatility in markets and policy direction.

Adding to these pressures is the re-emergence of US trade tariffs on China, Mexico and key manufactured goods. These factors are reshaping global supply chains, raising input costs and slowing global trade growth.

For African economies, the spillovers are varied – higher commodity price volatility, shifting investment flows, the potential redirection of manufacturing activity, and adjustments to sourcing and logistics patterns.

“These global tensions are filtering through to African markets in very real ways,” said Graphene Economics founder and director Michael Hewson.

“When liquidity is tight, public debt is high, and investment sentiment is uncertain, governments turn to the levers they can control. One of those levers is revenue collection, and transfer pricing becomes an important part of that effort.”

A tougher environment for South African companies

Graphene Economics’ survey findings showed that TP and related tax matters are increasingly being escalated to chief financial officers and boards.

This reflects their growing relevance for financial resilience and operational risk management. Across African jurisdictions, revenue authorities are –

• Increasing audit frequency and sophistication
• Leveraging expanded information-sharing networks
• Integrating data analytics into risk assessment
• Challenging profit volatility, even where commercial explanations exist
• Focusing on the level of substance in offshore entities
• Testing intercompany financing arrangements more aggressively

This trend is consistent with broader macroeconomic realities. Hewson noted that high public debt levels limit fiscal space and infrastructure investment, prompting a renewed push for revenue.

Simultaneously, implementation of the OECD’s Base Erosion and Profit Shifting reforms is a key consideration for very large multinational enterprises and raises compliance expectations.

This is particularly due to the global minimum corporate tax under Pillar Two, which establishes a global minimum corporate tax rate of 15% for large multinational enterprises.

“Multinationals operating in Africa need strong, coherent TP policies that align with the commercial realities of their businesses,” Hewson said.

“Authorities are no longer just checking documentation; they’re interrogating value chains, decision-making structures and economic substance.”

He added that the level of detail requested is increasing, and the tolerance for inconsistencies is decreasing. Despite these pressures, however, the report also highlighted growing resilience in several African economies.

Diversifying production bases, improvements in transparency, the integration of ESG considerations, and the regionalisation of supply chains are creating new growth avenues.

The shift toward “friend-shoring” and closer intra-African trade relationships may offer long-term benefits for multinationals prepared to invest in local markets.

Looking ahead, competitiveness rather than tax incentives alone is expected to shape investment attractiveness across the continent.

Businesses that prioritise financial resilience, operational clarity and robust governance will be better positioned to navigate an environment where tax risks form an integral part of strategic planning.

Hewson stressed that organisations need to adopt a more forward-looking approach to managing cross-border tax matters.

“TP is no longer solely a compliance function,” he said. “It sits at the intersection of economics, regulation and strategy.”

“Multinationals that understand this, and that invest in documentation, data quality and cross-functional alignment, will be better equipped to respond to scrutiny and avoid unexpected disputes.”