Key Takeaways: South Africa in Numbers How to Register Business in South Africa Time and Cost involved in Registrations Regulations and Reforms Key Statistics

1. CA Divakar Vijayasarathy
Doing Business in South Africa

2. RESEARCH CREDITS
Subash R
CA Jugal Gala

3. Legends Used in the Presentation
CIT Corporate Income Tax
DTAA Double Taxation Avoidance Agreement
EODB Ease of Doing Business
FDI Foreign Direct Investment
GDP Gross Domestic Product
MAT Minimum Alternate Tax
MOI Memorandum of Incorporation
PCP GDP Per Ca Pita GDP
PIT Personal Income Tax
VAT Value Added Tax

4. Presentation Schema
Country Overview Setting up Business
Registration with
CIPC
Registration with
SARS
Incentives and
Concessions
VISA and Permits
Exchange Control
Regulations
Covid Impact and
Reforms
Conclusion

5. Country Overview

6. Demography and Wealth
• 59.3 Million People (2020)
• 6th largest in Africa
• 25th in World
• Real GDP: $ 430 Billion (2nd highest in Africa)
• PCP GDP- $ 7346 (92nd in the world)
• 66% urbanized
• Sparsely populated in the western half and densely
populated in eastern half
.
• Rich in gold, diamonds, platinum, iron ore, manganese and
chromite
• Holds 95% of world’s platinum reserves
• 8th Largest producer of Gold.
• Currency Unit: South African Rand (ZAR/R)ER: $1= R16.5
• Annual CPI: 3.1%
Currency
Population
GDP
Urbanisation
Real Wealth
R

7. Business Environment
Sectoral contribution to GDP
Finance, Business services- 22.86%
Trading- 15.07%
Manufacturing- 13.39%
Transport, Storage &
Communication- 9.5%
Mining- 7.89%
Employment
Distribution
Services- 72.01%
Industry- 22.91%
Agriculture- 5.09%
Ease of Trading Across
Borders (World Bank)
145th rank
EODB (World Bank)
Overall: 84th rank
For starting
business: 139th rank

8. Popular Locations for Setting Up Business
CAPE TOWN
Top city in SA in terms of EODB. Has a low cost of living and low-cost
infrastructure. Economic activity is dominated by finance, insurance, real
estate, logistics, wholesale/retail trade, wood product manufacturing, and
electronics. It is also an emerging BPO hub.
DURBAN
It is a city of ports and works as a center of industry, trade, and
construction. Has a flourishing manufacturing sector similar to that of
Johannesburg. Many international corporations such as Samsung, Toyota,
and Unilever have set base here.
PRETORIA
Economic activity is dominated by sectors such as iron and steel works,
railway carriage, heavy machines, automobile manufacturing, and copper
casting. It is also the home to the South Africa Iron and Steel Corporation
(ISCOR).
JOHANNESBURG
Mining industry of South Africa is centered in Johannesburg. It is also highly
popular for manufacturing, heavy industries, IT, real estate, banking, media &
retail. Jo’burg also houses some of the biggest shopping centres in Africa.

9. Setting Up Business

10. Regulatory Agencies
Companies and Intellectual
Property Commission (CIPC)
South African Revenue Service
(SARS)
Department of Labour for
Unemployment Insurance
South African Reserve Bank
Registrar of Companies
Tax Collecting Authority
Regulator for
Unemployment
Insurance Fund
Overseas Exchange
Control Policy

11. Types of Business Structure
Types of
Business
Structure
Company
Private
Company (Pty
Ltd)
Personal
Liability
Company (Inc)
Public Company
(Ltd)
External Company
(branch of foreign
company operating
within SA)
Sole
Proprietorship
Partnership
Private Companies and Branches are the most common structures. All Companies have to
be compulsorily registered with CIPC.
A sole proprietor or partnership concern need not be registered with CIPC.

12. Registration with CIPC

13. Registration with CIPC (Steps/Time Taken/Cost)
Create an account with CIPC (1 day/ no charge)
Login to your account and Register Company with
CIPC @ eservices.cipc.co.za (5 days/ R125-R475)
Reserve Company Name (3 days/R 50)
Open Company’s Bank Account (1 day/ no charge)
Supporting Documents to be uploaded
• Certified identity copy of applicant;
• Certified copies of the Identity Documents of the
Directors and Incorporators;
• Lodgement of a passport copy is only accepted as
proof of identity for non-residents of South Africa.
• The name confirmation certificate (COR9.4)
• Attach a certified copy of the company's founding
documents and a certificate of incorporation or
comparable document.
• Online registration cannot be done for public
companies, personal liability companies, external
companies.
• Private companies not willing to adopt the standard
MOI provided by CIPC, should also undergo only
manual registration.
• The relevant incorporation forms and supporting
documents must be scanned and e-mailed to
companydocs@cipc.co.za
Steps to Register
Forms for
Manual
Registration
Public, PLC and
Private with
customised MOI
CoR14.1
CoR14.1A
CoR15.1B
External
CoR 20.1
CoR20.1A
CoR21.2
1
2
3
4
Manual Registration

14. Other Conditions
• Minimum Directors: 3 ; No maximum limit
Public
Company
• Minimum Director: 1 ; No maximum limit
• No maximum limit for shareholders.
Private
Company
• The external company will be treated only as a branch of an offshore company
• An external company is governed by the same founding documents as its head office.
External
Company
• Minimum Director: 1 ; No maximum limit for number of directors and shareholders
• Present and past directors of PLCs are jointly and severally liable together with the
company for debts and liabilities arising during their periods of office.
Personal
Liability
Company
There is no requirement for local ownership or directorship in the Companies Act.
However, a company must have a public officer responsible for dealings with the South African Revenue
Services, who must be resident in South Africa.

15. Registration with SARS

16. Registration with SARS
CIPC and SARS are linked electronically, so as to retrieve information previously
provided at CIPC.
Income tax registration with SARS (1 day/ no charge)
• Bank Statement
• Copy of registration documents depending on the nature of the company.
• Copy of a valid identity document, driving licence or passport, temporary identity document,
work permit of two members/directors/shareholders of the company.
Documents to be submitted for VAT registration (7 days/ no charge)
VAT 101 form to be submitted to the nearest SARS branch together with the following
documentation:
• certified copy of certificate of incorporation;
• certified copy of proof of the company's residential address, not older than three (3) months;
• original bank statement, not older than three (3) months;
• original balance sheets and income statements (proof of annual turnover);
• original identity document and certified copy thereof of the representative vendor submitting
the VAT 101 form;
• certified copies of the identity documentation of the directors of the company; and
• original proof of residential address of the representative vendor.

17. Tax Profile
PersonalTax
18-45%
(has up to 7
slabs)
Basic
Exemption
Limit : R 83,100
CorporateTax
28% for all
companies (No
Surtax or MAT)
Self assessment
tax to be paid in
3 instalments
DTAAs with 70+
jurisdictions
CapitalGainsTax
Individuals-
18%
Companies-
22.4%
VAT
Standard Rate
15%
Threshold for
registration: R 1
Million p.a.
WHT
Royalty,
Dividend &
Interest- 15%
(10% if DTAA in
force)
Return Due Date
VAT return 25th of next month (submitted every two
months) (monthly for TO >R 30Mn)
WHT
return
Last day of the month succeeding the
month in which tax has been withheld
PIT return Between 1st Sept- 16th November 2020
CIT return Within 12 months from end of financial
year of the company
Type of
person
Financial year
Company Period of 12 months ending on any
month
All other
persons
Period of 12 months ending on 29th
February

18. Tax Snippets
25.5 25.9 25.9 25.9 26.2
16.8 17.2 17.2 17.2 17.2
-
5.0
10.0
15.0
20.0
25.0
30.0
2014-15 2015-16 2016-17 2017-18 2018-19
Tax to GDP (%)
South Africa African Avg
38.3
25.2
16.6
5.9
4.3
9.7
Composition of tax revenue (%)
PIT VAT CIT Fuel Levy Customs Others

19. General Tax Incentives
Reduced CIT of 15% for businesses established in SEZs
Progressive (slab- based) tax rates ranging 7%-28% for small businesses (turnover< R 1 Mn).
Simple tax of 1-3% on turnover for small businesses in place of VAT, CIT, CG tax and dividend tax.
150% deduction on R&D expenditure for all companies.
Indefinite carry forward of trading losses.
20% standard deduction on capital gains.
Energy efficiency savings incentive to provide a deduction of R 0.95 for each KWh saved by taxpayer against a
baseline.
Tax deduction on investment made by a person in shares of a Venture Capital Company
Proposal in Budget (2020-21) to reduce the corporate tax gradually from 28%.

20. Sector-Specific Schemes and Initiatives
• Manufacturing Competitiveness Enhancement Programme (MCEP)- a support
scheme which offers manufacturing companies grants towards capital investment
and working capital facilities.
• For Capital Goods Industry – The Capital Projects Feasibility Programme (CPFP)-
The CPFP makes targeted grants that contribute to the cost of feasibility studies
into projects outside South Africa that are likely to increase local exports for South
African capital goods and services.
• Foreign Investment Grant (FIG)- FIG compensates qualifying foreign investors for
costs incurred in moving qualifying new machinery and equipment (excluding
vehicles) from abroad to South Africa.
• Sec 12I Tax incentive: For greenfield manufacturing companies having a minimum
investment of R200M, an additional depreciation allowance of 55%, an
investment deduction of R 900 Mn and a training deduction of R 30 Mn.
General
Manufacturing
• Automotive Investment Scheme (AIS)- The AIS provides for a grant of 20-30% of
the value of qualifying investment in productive assets, as approved
by Department of Trade and Industry
• People-Carrier Automotive Investment Scheme (P-AIS)- To stimulate growth in the
people-carrier vehicles industry by providing a cash grant of between 20 – 35% of
qualifying investments
Automotive
Industry

21. • Mineral Beneficiation: Various SEZs containing mineral deposits have
been earmarked for beneficiation of precious metals and minerals.
• Accelerated deduction of capital expenditure for companies
engaged in Mining
Mining
• Clothing and Textiles Competitiveness Programme (CTCP)- Targeted
grants to grow and develop the clothing, textiles, footwear, leather
and leather goods manufacturing sectors.
Textiles
Contd

22. Visas and Permits

23. Types of Visas
Corporate Visa
•Temporary work
authorisation
granted to a
corporate entity
(e.g.mine,farmers)
to employ a pre-
determined
number (at least
5) of skilled/
unskilled workers.
•Validity: 3 years
(non-renewable)
Business Visa
•Issued to a foreign
national to reside
and establish or
invest in a new or
existing business
in South Africa.
•Validity: 3 years
(renewable)
•Other conditions:
At least 60% of the
employees in
business should
be SA citizens or
permanent
residents.
Critical Skills Work
Visa
•To hire candidates
such as engineers,
CFOs, IT
specialists,
technicians,
architects etc.
•Validity: 5 years
(renewable)
Intra Company
Transfer Visa
•To transfer
employees of
foreign companies
to their branch or
subsidiary in
South Africa
•Validity: 4 years
(non-renewable)
•Other Condition:
Skill transfer plan
must be
developed to
transfer skills to a
SA citizen.
General Work Visa
•To hire a foreign
national for a job
position which
cannot be filled by
a South African
citizen.
•Validity: 5 years
(renewable)
•Other Condition:
Granted only
when employer
has proved that
the position
cannot be filled by
SA citizen.
Application for all Visas are made to the Department of Home Affairs. In addition to a Visa, a residence
permit should also be taken by the foreign national moving to work in SA.
In all cases the entity will have to demonstrate the need to hire foreign nationals.

24. Exchange Control
Regulations

25. FDI and Repatriation Norms
Non-residents may purchase securities without restriction and freely transfer capital in and out of
South Africa.
Foreign ownership is limited in agriculture, fisheries and marine, broadcasting and print media,
defense force, energy and mineral resources and telecommunications and transport.
Free repatriation of investment proceeds, dividends and branch profits, interest, royalties or similar
fees for the use of know-how, patents or similar property

26. FDI Snippets
1.52
2.22 2.06
5.57
4.62
0.48 0.75 0.59
1.51 1.32
-
1.00
2.00
3.00
4.00
5.00
6.00
2015 2016 2017 2018 2019
FDI Inflows to South Africa
FDI inflow ($ Bn) FDI inflow % of GDP
39.40
25.53
16.61
10.95
6.39
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
Sector-wise-Capital inflow (%)
UK, Belgium, Netherlands and USA are the major contributors of FDI contributing about 65%-80%
of total FDI inflows

27. Covid-19 Impact and
Reforms

28. Covid Impact
• GDP shrank an
annualized 51% in Q2.
• Steepest decline of
GDP since 1990.
Decline in GDP
• Turnover below the
normal range for 90%
of the firms
• More than 25% of
firms adopted lay off
and about 30% of firms
decreased their
working hours
Business
disruption
• Unemployment
rate increased
to 30.1% in Q1
• Decrease in
total employed
people by 2.2
Mn
Unemployment
• Prolonged
contraction of
economy is
expected till 2021
• Household and
Corporate Debt
expected to
increase
Post-Covid
Expectations

29. Covid Reforms
•Accelerated VAT refunds- VAT vendors will be permitted to file monthly claims
instead of filing every two months.
•Deferral of Self-assessment tax payments
•Deferral of employer’s liability on Pay As You Earn tax.
•Four-month holiday for companies’ Skills development levy contributions.
•Deferral of Income tax payments for businesses with TO < R 100 Mn
•Debt-Relief Schemes for small businesses affected by Covid on satisfaction of
certain conditions
Tax
measures
•SA President Cyril Ramaphosa announced a $26 billion fiscal stimulus package,
the largest in his country’s history, to tackle the economic fallout. The package
would be spent on credit guarantee scheme, income protection, tax deferrals
and health measures.
•Reduction in repo rate from 6.25% to 3.75% to increase liquidity and reduce
lending interest rates
•Grant of moratoriums for borrowers with no-default pre-covid.
•Formulation of price regulations to control the increase in prices of essential
products during the pandemic
Fiscal
measures

30. Conclusion
Lack of high-skilled labour force, high unemployment (30%), recent increase in labour
strikes and immigration laws make the employment of foreign workers more complicated.
The high income inequality and corruption among top officials are also causes for
concern.
Nevertheless, South Africa has large market potential and a competitive domestic
economy which can help to tide past the economic contraction caused by Covid.
The country also enjoys a strategic geographical location, that makes it an ideal hub to
access the sub-Saharan markets.
There has also been a shift from traditional industries to production and financial
services which reflects the path of its global peers.

31. Thank You!
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