South Africa company registration

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South Africa company registration

DOING BUSINESS IN SOUTH AFRICA

For over a decade, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with establishing a business in South Africa. Our experts serve our Clients with i) South Africa company registration ii) Government compliance iii) license registrations iv) visa applications v) work space rental solutions and vi) employee recruitment solutions.

SummaryLLCFree zone LLCPublic limited companyJoint VentureBranch officeTrustFoundation
Also known asPty. Ltd.IDZ Pty. Ltd.Ltd.Pty. Lrd.Branch OfficeTrustFoundation
Best use of company?All products and servicesManufacturing and export tradingTo secure public fundingTradingSpecific projectsTax planningTax Planning
How soon can you invoice Clients/sign sales contracts?2 weeks2 months1 month1 month2 monthsNoNo
How soon can you hire staff?2 weeks2 months1 month1 month2 monthsNo2 months
How soon can you sign a lease agreement?2 weeks2 months1 month1 month2 months1 month2 months
How long to supply corporate bank account numbers?1 month3 months2 months2 months3 months2 months3 months
How long to supply company registration/tax numbers?2 weeks2 months1 month1 month2 months1 month2 months
Corporate tax rate on annual net profits?28%15%28%28%28%18%-45%28%
Limited liability entity?YesYesYesYesNoNoNo
Government grants available?YesYesYesYesYesNoNo
Resident director/partner/manager/ legal representative required?NoNoNoNoYesNoNo
Minimum paid up share capital?US$1US$1US$3,800nonenonenonenone
Can bid for Government contracts?YesYesYesYesYesNoNo
Corporate bank account location?HSBC SASCB SADeutsche Bank SAStandard BankNedbankAbsa BankCitibank SA
Can secure trade finance?YesYesYesYesYesNoNo
VAT payable on sales to local customers?14%14%14%14%14%N/AN/A
Average total business set up engagement costs?US$12,330US$9,630US$10,130US$9,630US$10,780US$17,930US$9,530
Average total engagement period?2 months4 months3 months3 months4 months3 months4 months

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Accounting and tax considerationsLLCFree zone LLCPublic limited companyJoint VentureBranch officeTrustFoundation
Statutory corporate tax payable?28%15%28%0%28%18%-45%28%
Legally tax exempt if properly structured?NoYesNoYesNoYesYes
Group HQ tax incentives?YesYesYesNoYesYesYes
Must appoint an auditor?NoNoYesNoNoNoNo
Withholding tax on payments to foreign shareholders?15%15%15%15%15%15%N/A
Company RegistrationLLCFree zone LLCPublic limited companyJoint VentureBranch officeTrustFoundation
Resident director/partner/manager/ legal representative required?NoNoNoNoYesNoNo
Must appoint a South African resident public officer?YesYesYesYesYesYesYes
Minimum number of shareholders/partners?1112Parent companyNoneNone
Maximum shareholding for foreigners?100%100%100%100%100%100%100%
Minimum statutory paid up share capital?US$1US$1US$3,800US$1nonenonenone
Shelf companies available?YesYesYesNoNoNoNo
Time to incorporate a new entity?2 weeks2 months5 weeks1 month2 months1 month2 months
Can easily convert to a PLC?YesYesYesNoNoNoNo
Can have preference shareholders?YesYesYesYesNoNoNo
Business ConsiderationsLLCFree zone LLCPublic limited companyJoint VentureBranch officeTrustFoundation
Good entity for trademark registration?YesYesYesNoYesNoNo
Can secure an import and export license?YesYesYesYesYesNoNo

Government approval required for foreign owners?No
Must file an annual tax return?Yes
Must file annual financial statements?Yes
Access to double taxation treaties?Yes
Security deposit to be kept with Government?No
Public register of shareholders and directors?Yes
Sponsorship by a local citizen required?No
Our Client needs to travel to South Africa for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
Can be wholly foreign owned?Yes
The entity will likely be regulated by?CIPC
Minimum number of directors/managers?1
Bi-monthly VAT reporting to the Government?Yes
Must sign an office lease agreement during incorporation?No
Shareholders & directors documents to be attested/translated?No
Each foreign director needs a personal income tax number?No
Foreign director needs a residence visa?No
Maximum number of staff allowed?No maximum number for any entity
Expatriate to local staff ratio?37 local to 1 expat
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?Click link
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?No
Average custom duties suffered?18.74%
Government foreign investment approval required?No
Average monthly office rental? (US$ per sq m)US$30
Minimum statutory monthly salary?US$270
Average monthly US$ salary for local skilled employees?US$700
US$ deposit interest rate? (1 year average)8%
Overseas remittance currency controls?Yes
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Very good
Crowd funding available in this country?Yes

Press the link headings below to read detailed, relevant, up to date information.

  • Advantages and Disadvantages

    Advantages of South African company registration

    South Africa business registration advantage

    1. Setting up a business in South Africa is easy because:
      • Incorporating an LLC requires a minimum paid-up share capital of US$1. Furthermore, the company setup process can be completed within 4 weeks;
      • Only one director and one shareholder must be appointed, who can be of nationality. Consequently, a South African LLC can be 100% foreign owned.
    2. South African Government offers several R&D incentives including:
      • R&D projects with initial investment less than US$400,000 are eligible for grants worth US$200,000. Similarly, projects with initial investment between US$400,000 and US$2,000,000 are eligible for grants worth US$500,000. Finally, projects with investment higher than US$2,000,000 are eligible for grants worth at least US$1,000,000;
      • Private companies investing in R&D projects relating to science and technology, can receive refunds from the government worth 150% of the operating expenditure incurred;
      • Resident companies investing in projects to determine the feasibility of foreign projects which could be implemented in the country to improve trade, are eligible for grants worth up to US$500,000;
      • Certain small businesses can apply for grants worth i) US$80,000 to cover the costs of approved tools and machinery and ii) US$20,000 to cover the employee training and business development costs;
      • Investments in the automotive industry, to improve the productivity of light motor vehicles, are eligible for grants worth between 20% and 30% of the value of the qualifying investment.
    3. South Africa resident companies enjoy several non-R&D incentives including:
      • Dividends from foreign companies and capital gains from sale of holdings in a foreign company can be corporate tax exempt if the receiving entity holds 10% stake in the foreign entity;
      • There are no withholding taxes levied on interest payments made to resident and non-resident companies;
      • Companies investing in the tourism and manufacturing sectors can receive monetary grants of up to US$800,000 on investments higher than US$5 million;
      • Monetary incentives up to US$33,000 per job created will granted to companies who set up business process outsourcing (BPO) operations in South Africa;
      • Businesses investing in certain sectors of the South African economy are eligible for benefits including i) monetary grants worth US$300,000 to cover marketing, advertising and publicity costs ii) 80:20 cost sharing grants to finance the project and iii) monetary grants worth US$400,000 to cover travel, accommodation and exhibition costs for new trading businesses;
      • South Africa has signed 73 Double Taxation Agreements and 45 Bilateral Investments Agreements to reduce withholding taxes on foreign payments and customs duties on imports/exports.

    Disadvantages of South African company registration

    1. Every signatory of a South African corporate bank account must hold a South African work visa. Although a South African resident director is no longer required by law, Healy Consultants recommends that our Clients appoint a local director who will also be the bank signatory. To secure company registration and bank account opening in a timely manner, most of our Clients request Healy Consultants to appoint a nominee resident director. If required, Healy Consultants’ resident director service fee amounts to US$9,950 per annum;
    2. South Africa is a high tax country because i) corporate tax is 28% ii) VAT is 14% iii) capital gains for companies is 18% iv) asset tax is 1% v) withholding tax is up to 15% vi) average import duty is 19% and vii) transfer duty on immovable property is 8%;
    3. It is difficult to find qualified labor in South Africa because:
      • Only 2% of the population holds a university degree;
      • Only 39% of the population speaks fluent English, making language a barrier for foreign entrepreneurs.
    4. A South Africa resident business will face certain bureaucratic hurdles including:
      • Repatriation of profits to a foreign country will require prior approval from the Central Bank (SARB);
      • A South African resident will be required to be the signatory when opening a corporate bank account;
      • Labor unions interfere with the simple employer-employee relationship, making it harder to hire or fire employees;
      • South Africa’s Corruption Perception Index stands unfavorably at 69th out of a total of 174 countries.
    5. The South African Rand is one of the most volatile currencies in emerging markets, giving uncertainty to the value of foreign investment;
    6. South Africa is one of the world’s most dangerous countries to live in. It ranks as the 14th most homicidal country in the world.
  • Best uses for a South Africa company

    1. South Africa is an excellent place to setup a manufacturing and distribution company because:
      • Incorporating in South Africa’s 5 Industrial Development Zones offers companies i) 100% exemption on custom duties ii) 100% exemption on VAT and iii) up to 30% grants on cost of plants, machinery, equipment, commercial buildings and vehicles;
      • Investments in construction of infrastructure for industrial projects are eligible for grants covering between 10% and 30% of the total development costs;
      • Companies moving machinery into South Africa can apply for a cash grant worth either i) 15% of the value of the equipment or ii) US$2.7 million, whichever is lesser;
      • South Africa boasts Africa’s best infrastructure comprising of 31,000 km of train network, 8 international airports and 21 seaports facilitating easy mobilization of goods.

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Company registration

  • Time to incorporate: Four weeks
  • Cost to set up: US$9,630
  • Minimum capital: US$1
  • Physical office required: No

Required appointments

  • Shareholders: 1
  • Directors: 1
  • Company secretary: No
  • Resident director: No

Key facts

  • Corporate tax rate: 28%
  • Corporate tax base: Worldwide
  • Shelf companies: Available
  • Main company type: Private limited company

Contact us

For additional information on our business registration services in South Africa, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Paavan Chhabra, directly:
client relationship officer - Paavan