South Africa company registration

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South Africa company registration

DOING BUSINESS IN SOUTH AFRICA IN 2020

pay fee by instalmentsbusiness setup without travel

For almost two decades decade, Healy Consultants Group PLC assists our Clients to start a business in South Africa, including i) company registration and multi-currency corporate bank account opening and ii) accounting and tax considerations and iii) regulatory license and Government grants and iv) office rental and employee recruitment.

Compare different South Africa entitiesLLCFree zone LLCPLCJoint VentureBranch officeTrustFoundation
Also known asPty. Ltd.IDZ Pty. Ltd.Ltd.Pty. Lrd.Branch OfficeTrustFoundation
Best use of company?All products and servicesManuf/ export tradingTo get pub. fundingTradingSpecific projectsTax planningTax Planning
How soon to invoice Clients?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 a/c?1 month3 months2 months2 months3 months2 months3 months
How long to supply co. reg / 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
Res. director/partner/ legal rep. required?NoNoNoNoYesNoNo
Must appoint a South African resident Public Officer?YesYesYesYesYesYesYes
Minimum paid up share capital?US$1US$1US$1nonenonenonenone
Can bid for Government contracts?YesYesYesYesYesNoNo
Corporate bank account location?NedbankAbsa BankOld Mutual BankStandard BankNedbankAbsa BankCitibank SA
Can secure trade finance?YesYesYesYesYesNoNo
VAT payable on sales to local customers?15%15%15%15%15%N/AN/A
Average total business set up costs?US$12,330US$9,630US$18,680US$9,630US$15,480US$17,930US$9,530
Average total engagement period?2 months4 months3 months3 months4 months3 months4 months

See full table

Accounting and tax considerationsLLCFree zone LLCPLCJoint 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
WH tax on payments to foreign s/holders?15%15%15%15%15%15%N/A
Company RegistrationLLCFree zone LLCPLCJoint VentureBranch officeTrustFoundation
Res. director/partner/ legal rep. required?NoNoNoNoYesNoNo
Must appoint a South African resident public officer?YesYesYesYesYesYesYes
Min. 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$1US$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 LLCPLCJoint VentureBranch officeTrustFoundation
Good entity for trademark registration?YesYesYesNoYesNoNo
Can secure an import and export license?YesYesYesYesYesNoNo

Govt 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 kept with government?No
Public register of shareholders and directors?Yes
Sponsorship by a local citizen required?No
Our Client must travel to South Africa?No
Temp. 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
Sign office lease during incorporation?No
S/holder/director docs attested/translated?No
Foreign director needs personal tax no.?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
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%
Govt foreign investment approval required?No
Average monthly office rental? (US$/sq m)US$30
Minimum statutory monthly salary?US$270
Average US$ salary for local skilled staff?US$700
US$ deposit interest rate? (1 year average)1.6%
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

South Africa business setup summary

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. Company registration in South Africa is straightforward and inexpensive because:
      • Registering an LLC company in South Africa requires a minimum paid-up share capital of US$1;
      • Company incorporation can be completed within 2 weeks;
      • Only one director and one shareholder are needed, and can be any nationality.
    2. The South African government supports Research and Development (R&D) companies including:
      • R&D projects with initial investment of 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. Projects with investment higher than US$2,000,000 are eligible for grants worth at least US$1,000,000;
      • Foreign-registered companies in South Africa investing in R&D projects relating to science and technology can receive government refunds worth 150% of the operating expenditure incurred;
      • The Capital Projects Feasibility Programme (CPFP) provides grants between ZAR100,000 and ZAR5,000,000 (US$6,900 to US$344,830) to eligible companies;
      • The SEDA Technology Programme (STP) grant provides financial assistance to eligible small companies when i) purchasing tools, machinery and equipment up to ZAR800,000 (US$55,175) or ii) paying for employee training and business development services up to ZAR200,000 (US$13,795);
      • See this webpage for more detailed information on South Africa government support.
    3. South African registered businesses enjoy several non-R&D incentives including:
      • Dividends and capital gains received from foreign companies are exempt from corporate tax if the local company holds at least a 10% stake in the foreign company repatriating the funds;
      • Companies investing in tourism and manufacturing can receive monetary grants of between 15% and 30% of the total investment amount, up to US$2,07 million;
      • Companies setting up Business Process Outsourcing (BPO) operations in South Africa are eligible for grants of up to US$8,550 for every job created;
      • South Africa has signed more than 100 Double Taxation Agreements and well as 50 Bilateral Investment Agreements to reduce withholding taxes on foreign payments and customs duties on imports/exports.

    Disadvantages of South African company registration

    1. A resident Public Officer must be appointed to all companies, which incurs additional expense for an investor. If required, Healy Consultants’ Public Officer fee amounts to US$2,950 per annum.
    2. South Africa is a high tax country with i) 28% corporate tax; ii) 15% VAT; iii) 18% capital gains for companies; iv) 1% asset tax; v) up to 15% withholding tax; vi) 19% average import duty and vii) 8% transfer duty on immovable property;
    3. It is difficult to find qualified labour in South Africa because:
    4. A South African resident business faces bureaucratic hurdles including:
      • Repatriation of profits to a foreign country requires prior approval from the Central Bank (SARB);
      • Labour unions interfere with simple employer-employee relationships, making it harder to hire or fire employees;
      • South Africa is considered corrupt by global standards.
    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, with the world’s fifth highest murder rate;
    7. South Africa is a risky investment destination because:
      • The macroeconomic weakness exacerbated by the commodity-crash at the end of the commodity super-cycle;
      • The economy has suffered years of fiscal and current account deficits relying on external debts. The economy’s total external debt was almost US$177.676 billion by the end of 2019;
      • In early 2020, South Africa was downgraded to full junk status by Moodys.

  • Best uses for a South Africa company

    1. South Africa is an excellent place to set up a manufacturing and distribution company because:
      • Incorporating in one of South Africa’s five 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 for industrial projects are eligible for grants of between 10% and 30% of 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 less.

Company registration

  • Time to incorporate: Four weeks
  • Cost to set up: US$12,530
  • Minimum capital: US$1
  • Physical office required: No

Required appointments

  • Shareholders: 1
  • Directors: 1
  • Company secretary: No
  • Resident director: No
  • Public Officer: Yes

Key facts

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

Healy Consultants’ video on South Africa business setup
Contact the presenter: Henry James Beck, Client Engagements Manager, Healy Consultants Group PLC

Tell us what you need - we’ll send you a customised proposal in 5 hours!

Useful links for South Africa

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Contact us

For additional information on our business registration services in South Africa, please contact our in-house country expert, Mr. Henry James Beck, directly:
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  • Mr. Henry James Beck
  • Client Engagements Manager
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