South Africa company registration

DOING BUSINESS IN SOUTH AFRICA IN 2018

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.

Summary table of South Africa company registration

Summary	LLC	Free zone LLC	Public limited company	Joint Venture	Branch office	Trust	Foundation
Also known as	Pty. Ltd.	IDZ Pty. Ltd.	Ltd.	Pty. Lrd.	Branch Office	Trust	Foundation
Best use of company?	All products and services	Manufacturing and export trading	To secure public funding	Trading	Specific projects	Tax planning	Tax Planning
How soon can you invoice Clients/sign sales contracts?	2 weeks	2 months	1 month	1 month	2 months	No	No
How soon can you hire staff?	2 weeks	2 months	1 month	1 month	2 months	No	2 months
How soon can you sign a lease agreement?	2 weeks	2 months	1 month	1 month	2 months	1 month	2 months
How long to supply corporate bank account numbers?	1 month	3 months	2 months	2 months	3 months	2 months	3 months
How long to supply company registration/tax numbers?	2 weeks	2 months	1 month	1 month	2 months	1 month	2 months
Corporate tax rate on annual net profits?	28%	15%	28%	28%	28%	18%-45%	28%
Limited liability entity?	Yes	Yes	Yes	Yes	No	No	No
Government grants available?	Yes	Yes	Yes	Yes	Yes	No	No
Resident director/partner/manager/ legal representative required?	No	No	No	No	Yes	No	No
Minimum paid up share capital?	US$1	US$1	US$3,800	none	none	none	none
Can bid for Government contracts?	Yes	Yes	Yes	Yes	Yes	No	No
Corporate bank account location?	HSBC SA	SCB SA	Deutsche Bank SA	Standard Bank	Nedbank	Absa Bank	Citibank SA
Can secure trade finance?	Yes	Yes	Yes	Yes	Yes	No	No
VAT payable on sales to local customers?	15%	15%	15%	15%	15%	N/A	N/A
Average total business set up engagement costs?	US$13,330	US$9,630	US$15,830	US$9,630	US$10,780	US$17,930	US$9,530
Average total engagement period?	2 months	4 months	3 months	3 months	4 months	3 months	4 months

See full table

Accounting and tax considerations	LLC	Free zone LLC	Public limited company	Joint Venture	Branch office	Trust	Foundation
Statutory corporate tax payable?	28%	15%	28%	0%	28%	18%-45%	28%
Legally tax exempt if properly structured?	No	Yes	No	Yes	No	Yes	Yes
Group HQ tax incentives?	Yes	Yes	Yes	No	Yes	Yes	Yes
Must appoint an auditor?	No	No	Yes	No	No	No	No
Withholding tax on payments to foreign shareholders?	15%	15%	15%	15%	15%	15%	N/A
Company Registration	LLC	Free zone LLC	Public limited company	Joint Venture	Branch office	Trust	Foundation
Resident director/partner/manager/ legal representative required?	No	No	No	No	Yes	No	No
Must appoint a South African resident public officer?	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Minimum number of shareholders/partners?	1	1	1	2	Parent company	None	None
Maximum shareholding for foreigners?	100%	100%	100%	100%	100%	100%	100%
Minimum statutory paid up share capital?	US$1	US$1	US$3,800	US$1	none	none	none
Shelf companies available?	Yes	Yes	Yes	No	No	No	No
Time to incorporate a new entity?	2 weeks	2 months	5 weeks	1 month	2 months	1 month	2 months
Can easily convert to a PLC?	Yes	Yes	Yes	No	No	No	No
Can have preference shareholders?	Yes	Yes	Yes	Yes	No	No	No
Business Considerations	LLC	Free zone LLC	Public limited company	Joint Venture	Branch office	Trust	Foundation
Good entity for trademark registration?	Yes	Yes	Yes	No	Yes	No	No
Can secure an import and export license?	Yes	Yes	Yes	Yes	Yes	No	No

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

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
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 15% 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 69^th 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 14^th 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.

Company registration

Time to incorporate: Four weeks
Cost to set up: US$13,330
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

Healy Consultants Group PLC is beginning a 6 month project to improve our brand, including business web site design, social media activity, mobile apps, SEO organic rankings and adwords advertising.

Because of the size of this project, we need to outsource this project to a quality professional e-marketing firms. If your company would like to help Healy Consultants Group PLC with this project, please complete the 5 minute questionnaire below:

How can you help us?
Does your company have past experience helping a global company in our specific industry?
If yes, please explain how you can help Healy Consultants Group PLC?
Please include below a sample of your professional services and fees:
Business web site re-design – US$
Company brochures design – US$
Logo and business cards design – US$
Mobile apps development – US$
Tell us about you?
Name of your company?
Your email address?
Website URL of your company
What country are you based in?

What services can your company provide Healy Consultants PLC?
How many e-marketing staff are in your Department?
How long has your company provided these marketing services?
Is your Firm regulated by a Government Ministry? If yes, which Ministry?
What is the name and phone number of the staff member who will project manage Healy Consultants Group PLC e-marketing project?
How many clients does your e-marketing team currently serve?
What makes your company unique from the competition?
Can you show us some examples of how your e-marketing services helped your Clients' grow?
How quick is your response times?
Do you provide post-project support?
Please email us a copy of your company service agreement?
Web development and search engine optimization (SEO)
What is your first impression of our website?
How can you improve the website’s navigation system?
How can you help Healy Consultants to revamp our business website?
If you have the time, kindly identify 5 simple improvements to our Singapore company registration guide
If you have the time, kindly advise some simple ideas to improve Healy Consultants’ homepage
Can you provide us a customised CRM system? If yes, please provide the price range.
List at least 3 major Clients' your team helped in the past 2 years? Please provide relevant websites for reference, e.g. company website, social media links, etc. and a summary of what you did to help this Client improve their website/branding/social media
What is your experience in the SEO/link building industry?
How do you keep up to date with Google’s best practices and algorithms?
Do you have past experience designing marketing deliverables for a company in my specific industry?
If yes, please explain how you can help Healy Consultants Group PLC’s e-marketing activity?
For every country on the planet, can you manage Healy Consultants’ Google AdWords campaign? If yes, please state your level of expertise and provide us the price range.
Social media management
Can you contribute a guest blog for Healy Consultants? If yes, please provide the price range.
Can you provide us a social media tool/software? If yes, please provide the price range.
Can you manage Healy Consultants’ blog? If yes, please provide the price range.
Can you manage our Facebook account? If yes, please state your level of expertise and provide us the price range.
Can you manage our Twitter account? If yes, please state your level of expertise and provide us the price range.
Can you manage our LinkedIn account? If yes, please state your level of expertise and provide us the price range.
Can you manage our Quora account? If yes, please state your level of expertise and provide us the price range.
Can you create videos for Healy Consultants PLC? If yes, please state your level of expertise and provide us the price range.
Mobile application development
What type of apps do you specialise in?
Where can I find the examples of mobile applications you have already developed?
How do we maintain the app?
Website features and applications
Can you provide us a payment system/software? If yes, please provide the price range.
Can you provide us a website security audit? If yes, please provide the price range.
Can you provide us a live chat assistant? If yes, please provide the price range.
Can you provide us a virtual office number? If yes, please provide the price range.
Conclusion (must be completed)
How many hours per week will you spend on our account?
What we can expect to receive in terms of reporting?
What results can we expect in six months?

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DOING BUSINESS IN SOUTH AFRICA IN 2018

Summary table of South Africa company registration

South Africa business setup summary

Advantages and Disadvantages

Advantages of South African company registration

Disadvantages of South African company registration