InvestSA

Doing business in South Africa

  • Starting a business​
  • Business bank account​
  • Tax basics​
  • Labour policies
  • Visa and Immigration

 

 
 
 
 
 
 

Types of business entities

 
  • Company (public or private) incorporated under the Companies Act 71 of 2008)
  • Personal liability company
  • Partnership
  • Shares in a local company
  • Business trust
  • Sole proprietorship
  • External company (branch of a foreign company)
  • for detailed information visit the CIPC website.
 
 
 
 

Reserving a company name

  • Decide on a name for the enterprise (with at least two other alternatives)
  • Undertake a name search on the Companies and Intellectual Property Commission (CIPC) website to ensure your preferred name has not been reserved by another enterprise
  • Reserve a proposed name by completing the relevant forms available from the CIPC
  • Await a registration number for the proposed enterprise
  • For detailed information visit the CIPC website.
     
     
 
 
 
 

Registering a company

 

The most common way to register is through the CIPC websiteYou will need the following documents:

  • A valid passport
  • Police clearance certificates for all countries resided in for one year or longer
  • A business plan, outlining the feasibility of the business
  • Proof or an undertaking that at least five South Africans or permanent residents will be permanently employed in the business
  • A written agreement with details of the partners/directors and their residential status in South Africa, if the application is an investment in an existing business
  • Certification that at least R2.5 million in cash or a capital contribution of at least R2.5 million or a combination of cash and a capital contribution is available.
  • for detailed information visit the CIPC website.
     
     

Before opening up a company bank account, you need to register your business in South Africa, as those documents will be needed to support your application. The bank will advise you on  any other documents needed.

An individual account may be opened only by a person holding a valid work or resident’s permit. In addition, you would have to provide a passport and proof of address (a utility bill usually suffices) and may also have to make an opening deposit of a significant amount.

The type of bank account that you can open in South Africa depends on the type of permit that you have been issued. If you have a work permit you will be able to open a normal resident account with no restrictions. Should your entry visa not permit you to earn an income in South Africa, a non-resident account will be opened. This account is subject to the restriction of not permitting South African currency to be deposited, i.e. WHAT? can only be used for foreign currency.

 In both instances you will require the following documentation:

  • Valid passport with entry visa
  • Letter of introduction from your foreign bank
  • Three month’s bank statements from your current bank
  • Proof of residential address

Some exceptions may nonetheless be made.

Credit and charge cards commonly accepted in South Africa include: Diners, Mastercard, Standard Bank Card, Visa and American Express. Cash can be drawn from most ATMs, with withdrawal fees varying from bank to bank. Traveller’s cheques are also a form of accepted payment or exchange, incurring variable commission fees. All major credit cards are accepted, and South Africa has both a nationwide network of ATMs and a robust, rapidly growing online banking system.

Becoming tax compliant

After you have registered your business and received the enterprise number, you need to register for the following from the South African Revenue Service(SARS) – receiver of revenue :

Income tax registration: The principal source of direct tax revenue in South Africa is income tax. South Africa has a residence-based system of taxation. Non-residents are taxed on income earned from a South African source. 

For details of taxation rates go to: Current rates of taxation

Value-Added-Tax number:  Businesses with annual taxable turnover of more than R1 million must register for VAT.

Employee withholding taxes: Pay-As-You-Earn (PAYE), Unemployment Insurance Fund (UIF) and the Skills Development Levy (SDL)

PAYE: The tax required to be deducted by an employer from an employee’s remuneration paid.

UIF: These funds are used to provide short-term relief should workers become unemployed or be unable to work for various reasons.

SDL: This levy is used by the government to fund education and training as stated in the Skills Development Act, 1998. The levy is payable monthly by employers to SARS.

The South African employment relationship between an employer and an employee is fundamentally governed by the employment contract. The employment contract is, however, always subject to sectoral determinations, bargaining council agreements and employment legislation that provide minimum standards, rights and entitlements to the employment relationship. Minimum terms and conditions of employment are regulated by the Basic Conditions of Employment Act 75 of 1997.

Foreign employees working in South Africa are protected by South African employment laws.

Employment Equity Act

The aim of this Act is to promote equal opportunity and fair treatment in employment through the elimination of unfair discrimination. Affirmative action measures must be implemented to redress disadvantages in employment experienced by designated groups, in order to ensure their equitable representation in all occupational categories of employment.

Occupational Health and Safety Act

The Occupational Health and Safety Act requires an employer to bring about and maintain, as far as reasonably practicable, a work environment that is safe and without risk to the health and safety of its workers.

Skills Development Act

This Act provides a framework to devise and implement national, sectoral and workplace strategies to develop and improve the skills of the South African workforce.

Employee rights - Dismissals and dispute resolution

The Labour Relations Act regulates and deals with dismissals or termination of employment. This recognises three grounds on which a termination might be legitimate: conduct of the employee, the capacity of the employee, and the operational requirements of the employer’s business. There are strict procedures for dismissing an employee as well as dispute mechanism to resolve conflicts.

Trade unions

Trade unions remain an important force in South Africa, active in most industries, and representing a significant percentage of the workforce. Collective bargaining is regulated by the Labour Relations Act. Most collective bargaining occurs at employer level, but some industries are regulated by industry-level bargaining councils where bargaining between employer and employee organisations will take place.

A list of registered trade unions can be accessed at:
https://www.labourguide.co.za/trade-unions-in-south-africa

South Africa’s immigration system is regulated by the Immigration Act, 2002 (Act No. 13 of 2002). This Act facilitates foreign investment and the employment of needed foreign labour as well as enabling the entry of exceptionally skilled or qualified people.

Foreign nationals from some countries are exempt from obtaining visas before coming to South Africa. Nationals that are not exempt from obtaining visas are required to obtain a visa before they depart for South Africa. The Immigration Act provides for two main categories under which a person may stay in South Africa, being visas for temporary visits and permits for permanent residency.  Visit the nearest South African High Commission, Embassy or Consulate to make an application.

Details of the latest regulations around immigration are available on the Department of Home Affair’s website (www.dha.gov.za), or South African High Commission or Embassy or Consulate.

The following are some of the categories for temporary residence visas:

Business visa: To establish a business or to invest in an existing business venture.

General work visa: Issued when the South African employer can show that it has been unable to find a South African citizen (or permanent resident) with the same skills (or better) than those of the foreign national.

Critical skills work visa: The introduction of this category of work visa aims to assist in the attraction of critical skills into South Africa.

Intra-company transfer work visa: This visa allows for employees to be temporarily transferred/deployed to a branch, subsidiary or an affiliate of that company in South Africa.

Corporate visa: The corporate visa allows for bulk employment. Companies need to provide proof that at least 60% of the total staff complement are citizens or permanent residents. The departments of trade and industry and labour will make recommendations for a corporate visa application.

Business visa: Issued for businesses that will enhance the national interests. The feasibility of the prospective business venture, and the benefit it would have for the South African economy, must be assessed before a business visa may be issued.

The Department of Home Affairs has opened 12 Visa & Permit Facilitation Centres in South Africa for lodging applications.
These will be assessed by Department of Home Affairs in Pretoria. Non-South Africans with a legal residency permit in South Africa
can apply for a visa or permit at these centres.

www.vfsglobal.com/dha/southafrica/