South Africa with an open door economy to receive anyone interested in locating their offshore companies and companies, presents itself with a guaranteed regulatory and legal framework that encourages foreign entrepreneurs to choose this destination to establish their companies. 

An advantage of this jurisdiction and one that is important to note is that South Africa has signed more than 100 double taxation agreements and 50 bilateral investment agreements to reduce withholding tax on foreign payments and customs duties on imports/exports.

There are many legal forms that can be registered by foreigners in this jurisdiction, first of all, highlights the South African limited liability company. Pty. Ltd. is an attractive vehicle for most industries, thanks to its low share capital requirements.

It is the most common type of entity established by foreigners and locals in South Africa, this entity is established with at least two members 1 director and 1 shareholder.

Foreigners can also choose to set up their operations in one of South Africa's Industrial Development Zones (IDZs). The South African free zone company is an attractive vehicle for an export-oriented manufacturing business for this purpose, they will need to set up a Pty. Ltd. and open a corporate bank account. In addition, you will need to lease a space within the IDZ and obtain an operating permit.

The South African joint-stock company, this business structure is recommended when the investor wishes to obtain capital from the South African public. However, the company has no obligation to list on the local stock exchange.

¿JV or branches?

The joint venture can be a limited liability company (Pty. Ltd.) but it is not necessary to register one, in which case the company will be executed according to the terms of the joint venture contract. A joint venture is recommended when the investor plans to implement a project of limited duration and already has a reliable joint venture partner in South Africa.

In South Africa, the Branch is known as the "external company". This type of business structure is not considered separate from its overseas head office, which is consequently legally responsible for all losses incurred by its South African branch. Registering a branch is advisable only in industries subject to high capital requirements such as the banking sector.

While associations exist in South Africa, the Commercial Register does not allow the registration of an association as a legal entity. In addition, all partners are subject to unlimited liability for the debt and losses of the partnership and at least one of them must reside in South Africa for the partnership agreement to be valid. It is not recommended to do business in South Africa through a partnership unless you already live in the country.

There is no Representative Office in South Africa. Representative offices in this country are actually branches without business operations.

All LLCs must submit an annual return and financial statements to the Commission on Business and Intellectuals (CIPC). ICPC may require the company to submit audited financial statements.

In South Africa, the tax treatment of foreign investment will depend on the modality chosen when settling in the country. If you have chosen to incorporate and register a company in accordance with South African law, either with 100% foreign capital or by forming a joint venture with local partners, the company will receive the same tax treatment as any other South African company.

Thus, the corporate tax rate applicable to profits will be 28%.

If you wish to register a company in South Africa, Foster Swiss can advise you. We help you in practically everything: we provide advice from the moment you choose a corporate structure for your company until even one year after you have incorporated your company. And of course we take care of the whole process for you.

For more information on this topic or any requirement related to our services, you can contact directly through info@fosterswiss.com