Accounting and tax
Below are some important information on accounting and reporting obligations in South Africa that companies may find useful.
Important tax considerations
- The standard corporate tax rate in South Africa is 28%;
- VAT is charged at a fixed rate of 14%. Companies with annual revenue higher than US$2.8 million must file monthly VAT returns, while others must file their returns every two months;
- Dividends from a South Africa resident company will be subject to withholding tax of 15%. Dividends from foreign companies can be corporate tax exempt if the receiving entity holds a 10% stake in the distributing entity;
- Royalty payments to a non-resident entity are subject to withholding tax of 12%. Interest payments are completely tax exempt;
- Capital gains are taxed at a fixed rate of 19%. Capital gains to a resident company from sale of holdings in a foreign company will be tax exempt if the resident company owns a 10% stake in the foreign company;
- Transfers of securities will be subject to a tax rate of 0.25%;
- South Africa has signed Double Taxation Treaties with 73 countries including Australia, Canada, China, Singapore and the USA to reduce withholding tax on foreign payments.
- Employers are required to contribute 1% of an employee’s gross income to the latter’s social security;
- A payroll levy of 1% is imposed on all companies with annual payroll costs higher than US$50,000. This tax is used to conduct training and re-training programs;
- Employers are required to contribute 2% of the employee’s salary to the Unemployment Insurance Fund.
Financial statements and filings
- All companies in South Africa must have their accounts reviewed each year by an independent accounting professional. Public and state-owned companies, along with those large enough to meet “public interest” criteria including revenue and employee thresholds, require an annual audit;
- All resident companies must file their tax returns within 12 months from the end of the calendar year;
- Healy Consultants’ Compliance Department will assist our Client with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing budgets, forecasts and sensitivity analysis;
- It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.
Legal and compliance
- A South African LLC must appoint at least 1 director and 1 shareholder, while a PLC must have 3 directors and 7 shareholders. These individuals may be of any nationality;
- Every South African company must appoint a resident public officer. If required, Healy Consultants will provide this service to our Clients for US$1,100 annually;
- The 2008 Companies Act requires all resident businesses in South Africa to have a registered office in the country;
- Resident companies must obtain prior approvals from the Reserve Bank when transferring money in or out of the country;
- All companies must lodge a Notice of Incorporation and Memorandum of Incorporation with the Companies and Intellectual Property Commission (CIPC) at the time of company registration;
- All Companies are required to register with the Department of Labor for Unemployment Insurance when they hire employees;
- Anti-trust laws prevent South African resident companies from entering into contracts which form cartels or monopolies.