Register company in South Africa: Introduction
To register company in South Africa is hassle-free if you are familiar with the entire incorporation process. With Tetra Consultants at the wheel, you will be able to dedicate your time and resources to other more important channels. With our lean-and-mean mentality, you can rely on our team of experts to provide you a seamless experience throughout the whole process of company registration in South Africa. Our ultimate goal is for your company to be operationally ready within the stipulated time frame. Our service package includes everything you will require to register company in South Africa:
- Register company in South Africa with the Companies and Intellectual Property Commission (CIPC)
- Local company secretary, public officer, and registered address
- Corporate bank account opening
- Annual accounting and tax services
How long to register company in South Africa and open a corporate bank account?
- Tetra Consultants will complete your South Africa company formation through a seamless and fuss-free procedure.
- Upon receiving the required due diligence documents of the directors and shareholders, Tetra Consultants will conduct a South Africa company registration search to check the availability of your preferred company name.
- The process to register company in South Africa can be carried out remotely and you will not be required to travel to South Africa during the registration process.
- Within 1 month, you can expect to receive your South Africa company tax number and a digital copy of the documents of your new company including Company Registration Certificate, Notice of Incorporation and Memorandum of Incorporation (MOI).
- After successful company formation, Tetra Consultants will assist to open a corporate account with a local bank or with an overseas global bank depending on your long-term goals and objectives. Opening an account in South Africa for foreigners will usually take around 1 month to be completed.
- Consequently, you can expect to start operations and issue invoices with your new company within 2 months upon engaging Tetra Consultants.
- Tetra Consultants’ team of Chartered Accountants will ensure that your newly established company will continue to meet regulatory laws set by the South African Revenue Service (SARS). This includes providing you with monthly bookkeeping, preparation of financial statements and annual tax return filings.
Can a foreigner register company in South Africa?
- The local government offers foreign investors several options on the different types of business entities to choose from when they incorporate in the country. Tetra Consultants will advise you on the steps and requirements for completing company registration in South Africa for foreigners.
- For example, a South Africa private company can be registered with a foreign shareholder and foreign director. In most industries, a South Africa limited company can be wholly foreign-owned.
- South Africa resident companies are subjected to a Corporate Income Tax Rate of 28%, regardless of the location the income is derived from. Non-resident companies operating in the nation will also pay corporate taxes on income derived from within the country.
- However, small businesses with an annual turnover of less than ZAR 1 million can opt to pay a lower turnover-based presumptive tax ranging from 0% to 3%.
- Furthermore, you may be taxed on corporate income at a lower preferential rate of 15% if you set up a business in South Africa’s Free Zone.
- Under the new regulations in the Companies Act 2008, the size of the company is now considered when deciding whether companies should submit audited financial statements. This ensures that a larger number of private companies are audited, hence increasing transparency of business activities, and reducing corruption.
- Under the Companies Act 2008, a mandatory statutory audit regulated by the Independent Regulatory Board for Auditors (IRBA) is applicable for all companies incorporated locally if they meet the new regulatory requirements. For example, companies that hold more than ZAR 5 million worth of assets in a fiduciary capacity for persons not related to the company, in the ordinary course of its primary activities, in a financial year will be required to have an audit.
- Additionally, a company that has a public interest score exceeding 350 in a financial year is required to have an audit.
- Generally, there are no minimum paid-up capital requirements.
Types of business structures to consider when you register company in South Africa
Before proceeding to company registration in South Africa, it is important for you to analyze different types of business structures available to choose from. Tetra Consultants will assist to register your business in South Africa. There are 4 main types of business entities you can consider. According to South African Revenue Service (SARS), as long as it is a legal entity, you must register with the Companies and Intellectual Property Commission (CIPC).
Private Company (“Pty Ltd”)
- A private company is the most common choice for foreigners looking to register company in South Africa, and is the equivalent of a Limited Liability Company (LLC) in other jurisdictions.
- Since private companies are regarded as separate legal entities from shareholders, they offer shareholders protection against liabilities incurred by the company. In essence, shareholders and directors will not be held liable for liabilities incurred by the company.
- The company must have at least one director and shareholder, but no more than 50 shareholders. The director need not be local residents or nationals, and there are no limitations on foreign shareholding.
- Private companies may not offer shares to the public and there are restrictions on the transferability of their shares.
- A private company will be required to reserve a company name, complete a Memorandum and produce a written consent of the auditor (if any) to act for the company.
Personal Liability Companies (“Inc”)
- A personal liability company is a separate legal entity and is held jointly by current and previous directors.
- This business structure is mostly used for companies of doctors, lawyers or accountants.
- There must be a minimum of one director on the board of management.
- All directors are held responsible for contractual liabilities that occurred during their time at the position, while shareholders have limited liabilities.
- The advantage of such a company is being able to become a corporate entity while maintaining succession.
- This type of company is prohibited from offering its shares to the public and the transferability of its shares is restricted under MOI.
- It also offers greater flexibility for business owners as it allows them to decide how profits are distributed among members of the company.
- The cost to set up is lower than that of a partnership.
Partnership
- A partnership comprises 2 or more co-owners running a business together.
- Since a partnership is not a separate legal entity, each partner may be held liable for all the debts and liability incurred by the business. A partnership also does not involve separate taxes, with each partner required to pay a certain amount based on his or her proportion of the business earnings.
- There are three types of partnerships, namely General/Ordinary Partnership, Anonymous (sleeping) Partnership and Commanditarian Partnership. There are no statutory audit requirements for all three partnerships.
- In a General/Ordinary Partnership, partners are held jointly responsible for the liabilities, debts or profits.
- In an Anonymous (sleeping) Partnership, one of the partner’s identities is kept anonymous in accordance with the privacy policy, and is only held liable to the partners for his or her specific proportion of the shares.
- In a Commanditarian Partnership, the role of the partner is solely to be a financial participant with limited liability, like a typical shareholder. The partner then receives a share of the losses and gains but is only subject to limited liability based on either his or her specific share or based on an amount agreed by the partners.
Branch
- Foreign companies incorporated outside of the country can choose to incorporate a branch in South Africa. The foreign company must be registered as an external company if it is conducting or plans to conduct business activities within the nation.
- The South African branch will not be recognised as a separate legal entity from the foreign parent company. No tax will be withheld on transfers of profits from the branch to the parent company.
- A branch must register as a taxpayer and submit annual tax returns. For practical purposes, separate financial statements must be submitted to SARS.
How to register company in South Africa?
Step 1: Choosing an optimum business structure to register company in South Africa
- Prior to company formation, it is essential to choose the correct type of company.
- Based on your business structure and long-term goals, Tetra Consultants will advise you on the most optimum business entity, paid-up share capital, corporate structure and business licenses if applicable.
- Generally, the most common type of business in South Africa is the private company (“Pty Ltd”), which is also known as a company limited by shares.
Step 2: Reservation of company name
- Tetra Consultants will search and reserve your company name with the CIPC website. Our team will reserve your company’s name for up to 6 months. Each application for company name registration allows you to submit up to 4 names.
Step 3: Preparation and submission of relevant documents to register company in South Africa
- All companies in South Africa require a Memorandum of Incorporation (MOI) to be registered. Tetra Consultants will assist in drafting the documents required to register company in South Africa, which includes a certified identity copy of the applicant, certified copies of the Identity Documents of the Directors and Incorporators, name confirmation certificate (COR9.4) and Power of attorney if applicable.
- You will also be required to send us notarized passport copies of individual directors and shareholders.
- Once the relevant documents and company registration forms have been prepared, Tetra Consultants will register your company through the CIPC online platform.
- Upon successful incorporation with the companies registration office, the company will receive a company registration certificate with the company registration number and be registered as a taxpayer automatically.
Step 4: Corporate bank account opening after you register company in South Africa
- Depending on your business structure, the documents required will be slightly different.
- Tetra Consultants will help in consolidating the documents and opening a corporate account with a reputable bank. Some banks may require documents to be translated if they are not already in one of the South African official languages.
Accounting and tax obligations
- If a company is incorporated under the laws of South Africa and derives income from within or outside the country, a corporate tax will be imposed.
- For the assessment year ending on 31st March 2023, all resident and non-resident companies are taxed on corporate income at a reduced flat rate of 27% (previously 28%).
- For tax years ending before 31 March 2024, small business corporations meeting specific criteria are taxed at specified rates.
- No tax on the initial ZAR 95,750 of taxable income.
- 7% tax on income over ZAR 95,750 up to ZAR 365,000.
- ZAR 18,848 plus 21% tax on income over ZAR 365,000 up to ZAR 550,000.
- ZAR 57,698 plus 27% tax on income surpassing ZAR 550,000.
- Non-resident companies with a branch or permanent establishment in South Africa are liable for taxes on all income generated within the country.
- Additionally, companies that conduct business activities in South Africa will have to pay a Value-Added Tax (VAT) of 15%.
- Businesses must register for VAT if the total value of taxable goods or services is more than ZAR 1 million (approx. USD 57,500) in 12 months or is expected to exceed this amount.
- As per CIPC guidelines, public and state-owned companies mandate an audit. Private, personal liability or non-profit entities undergo auditing only when public interest criteria are met, like turnover or asset value.
- Tax on employment income is withheld by the employer under the PAYE system and remitted to the tax authorities.
- Income not subject to PAYE is self-assessed, and individuals must make tax payments at 6-month intervals during the tax year and final payments 6 months after the tax year.
- Dividends tax is imposed at 20% on dividends declared and paid by all resident companies, as well as by non-resident companies in respect of shares listed on the Johannesburg Stock Exchange (JSE). However, dividends are tax-exempt if the beneficial owner is an SA-resident company, SA retirement fund, or other prescribed exempt person.
- Tetra Consultants will assist you in registering for these considerations after assisting with the process to register company in south Africa.
Why register company in South Africa?
Political
- South Africa is part of many international organisations, the notable ones being World Trade Organization (WTO), International Monetary Fund (IMF) and G20. The country is also the latest member state of BRICS, an association of five major emerging national economies.
- Based on the Press Freedom Index, South Africa ranks at 32/180, which reflects a satisfactory degree of freedom for journalists and news organisations. It also has a score of 79/100 on the Global Freedom Scores, which accounts for the country’s political rights and civil liberties.
Economic
- South Africa is the second-largest economy in Africa. According to the World Bank, The country is an upper-middle-income emerging market, with a stock exchange among the top 20 in the world.
- According to PWC, South Africa has a high corporate tax rate of 28%. South Africa also has a Corruption Perceptions Index ranking of 69/180.
- South Africa is also the gateway to the Sub-Saharan markets. The country makes for a good place to establish a business in the region, and a platform for your organisation to expand your business activities from South Africa to the rest of the region.
- One of the continent’s major projects is Agenda 2063, Africa’s plan to become a global powerhouse through sustainable development and long-term stewardship of its resources. The project includes initiatives aimed to improve infrastructure, education, science, technology, arts, culture and peace on the continent. The key initiatives include the African Integrated High-Speed Railway Network (AIHSRN) and African Continental Free Trade Area. These initiatives will help to link large African centres with cities and agriculture projection centres, streamline trade and attract long-term investments.
- South Africa has fallen in terms of global competitiveness according to the 2020 World Competitiveness Yearbook (WCY) ranked by the IMD. South Africa ranked 59 out of 63 countries.
Social
- South Africa has a diverse population and a literacy rate of 95%. Despite the issue of unemployment and corruption, the country has established plans to eliminate poverty, reduce inequality and strengthen democracy through their National Development Plan (NDP).
Technological
- South Africa is undergoing digital reinvention and many corporations in South Africa are still in the early stages of their digital strategies implementation. The lack of digital talent is a significant constraint on digital reinvention in South Africa. This is an opportunity for your company to invest in digital talents ahead of peers.
Environmental
- South Africa is home to many natural resources. The country also promotes start-ups and does not have many red tapes to start a business.
- South Africa also faces infrastructure issues, especially in terms of electricity, water, and a growing population. The country’s population growth and urbanization call for increasing demand for these infrastructures, and this gap brings new business opportunities.
Free Zones in South Africa
- A free zone is also known as a free trade zone. It is a defined geographical area where there are exemptions to state taxes and duties, usually to promote the trading of goods and services. There are a few Special Economic Zones (SEZs) in South Africa. The benefits of operating in these SEZs include preferential 15% Corporate Tax, employment incentives and other tax relief such as building allowance.
- These SEZs are geographically designated areas set aside for specifically targeted economic activities. The main zones are:
Atlantis SEZ
- The Atlantis SEZ is part of the City of Cape Town’s initiative from 2011 to establish a Greentech manufacturing hub in Atlantis.
- This was in response to the Department of Energy’s Renewable Energy Independent Power Producer Programme (REIPPP), with the main objectives to localise manufacturing and create jobs.
- The Atlantis SEZ (ASEZ) capitalises on the province’s booming renewable energy and green technology sector – technologies that reduce or reverse the impact of people on the planet.
- Green technologies include renewable energy technologies such as wind turbines, solar panels, biofuels, and electric vehicles.
- The Atlantis SEZ is in a well-located and development-ready area. It has good access to major national road networks and is located in close proximity to key renewable energy markets.
Nkomazi SEZ
- The Nkomazi SEZ is located in the Nkomazi Local Municipality.
- It is the leading location for agro-processing and logistics services activities within South Africa.
- It is situated in a province that offers an ideal climate for forests, major mineral resources, manufacturing capacity and tourism.
- The Nkomati SEZ offers investors a multi-sector base of operations along the Maputo Development Corridor, which runs through Southern Africa’s most productive regions.
Coega IDZ
- The biggest Industrial Development Zone in Southern Africa, the Coega IDZ is situated in the Nelson Mandela Bay Metropolitan Municipality in the Eastern Cape Province.
- It is positioned strategically on the east-west trade route, serving both the African and global market base.
- It leverages public sector investment to attract foreign and domestic direct investment in the manufacturing sector. It is also South Africa’s first IDZ.
- It has attracted investment in the agro-processing, automotive, aquaculture, energy, metals logistics and business process services sectors.
- The IDZ was built for manufacturing including beneficiation of export goods, investment and local socio-economic growth such as skills development and job creation.
Richards Bay IDZ
- The Richards Bay Industrial Development Zone (RBIDZ) was created for the purpose of growing an industrial estate in the North-Eastern region of the country.
- Its purpose is to attract local and foreign investors who will beneficiate South Africa’s raw materials.
- It is linked to an international seaport of Richards Bay, tailored for the manufacturing and storage of minerals and products to boost beneficiation, investment and economic growth.
- The IDZ provides proximity to deepwater ports, minerals, and beneficiation.
East London IDZ
- The East London IDZ (ELIZD) was set up by the government for the aim of enhancing the competitiveness of the industry and the growth of the economy, and prioritises the principles of efficiency, sustainability, innovation and growth.
- It is famed for its specialised solutions for multiple dynamic industries, ranging from the agricultural-processing industry, to aquatic culture and automotives.
- It enables growing businesses to access new consumer markets and industry networks, fresh solutions and tailored manufacturing platforms.
Work Visas to apply for to register company in South Africa
Business Visa
- Tetra Consultants recommends the Business Visa for anyone starting a business in South Africa. This visa is for individuals seeking to invest in a business, or an existing start-up, and who will be working within the business.
- In order to be able to set up, invest or work within a business in South Africa, foreigners are required to apply for a Business Visa. In order to obtain the visa, individuals also have to expend a prescribed amount of financial capital on investment. Typically, you will need to own in excess of 25% of a business in the country.
- You will also need to submit Form BI-1738 and a certificate issued by a chartered accountant registered with the South African Institute of Chartered Accountants (SAICA) (if required).
Independent Financial Permit
- The Independent Financial Permit also offers a great alternative to other visas, as it offers automatic permanent residence.
- As permanent residents, foreign immigrants can retire, work, study or start a business in South Africa without the hassle of applying for special permits. They also enjoy many other rights and privileges that citizens are entitled to.
- Requirements for the permit:
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- Applicants must be able to prove a net worth of ZAR 12 million (approx. USD 688,000)
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- An acceptance fee of ZAR 120,000 (approx. USD 6,900) to the South African Department of Home Affairs is required upon approval of the visa.
Looking to register company in South Africa?
- Tetra Consultants will be your one-stop solution for all your concerns regarding how to register a company in South Africa. Our services include company formation, registered agent, registered address and business bank account opening.
- Contact us to learn more information about how to start a business in South Africa. Our dedicated and experienced team will revert within the next 24 hours and answer all your queries.
FAQ
What is the best business in South Africa?
- Most of the larger or profitable industries in South Africa are within the agriculture, electricity, and finance sectors. As such, Tetra Consultants will recommend setting up businesses in these sectors.
- Currently, South Africa is one of the world’s largest producers of crops like grapefruit, cereals, and castor oil seeds. Local wines are also highly regarded by tourists and locals. As agriculture is an important industry to South Africa’s economy, it is an ideal sector to set up a business in.
- Another profitable industry is the electricity, water, and gas industries. South Africa faces infrastructure issues and rapid population growth. This allows for many investment opportunities in the development of security, systems, hardware, and software development.
- Finance, real estate and business services are some of the biggest industries in South Africa. With a well-developed and regulated banking system, a finance-related business is an ideal option for companies in South Africa.
How much does it cost to start a business in South Africa?
- While there are no paid-up capital requirements when starting a business in South Africa, Tetra Consultants will recommend setting aside at least US$5,000 as your paid-up capital to fund your overhead expenditures as well as initial deposit for business account opening with a bank.
- As for Tetra Consultants’ engagement fees, this depends on the exact services required from Tetra Consultants. Our fees are inclusive of government fees and all fees will be clearly stated in our engagement letter prior to the start of the engagement. Tetra Consultants believes in transparency with our valued clients and there are no hidden fees.
Is a company secretary necessary to incorporate in South Africa?
- No, only public companies are required to have a company secretary. A private company does not need to appoint a company secretary. However, all companies in South Africa must appoint a public officer, who is a local resident in South Africa.
Can a foreigner register a business in South Africa?
- Yes, a foreigner can register a business in South Africa as long as they have a valid passport issued by their country of residence. There are no nationality requirements for directors and shareholders in a South African company. However, you will need to have a South African address to incorporate up your company.
Can I register a Close Corporation (CC) in South Africa?
- Under the New Companies Act 2008, close corporations can no longer be registered in the country. Hence, you will not be able to establish a new Close Corporation. However, existing Close Corporations are still valid business entities. You can choose to purchase an existing shelf company in South Africa if you wish to set up a Close Corporation.
Can I register a company without a company name in South Africa?
- Yes, you can incorporate a company without a business name in South Africa. If a reserved name is not submitted during the registration of the company, the registration number of the company will automatically become the company’s name.
- The company can subsequently opt to add a company name through a name amendment. The name amendment will require an approved name reservation and a resolution to amend the Memorandum of Incorporation (MOI) accordingly.
Do I need to register my business for tax?
- No, you do not need to do so if you register with the CIPC. Once a taxpayer has registered, the South African Revenue Service (SARS) will automatically generate an Income Tax reference number for the company.
- Only business owners that did not incorporate their business with the CIPC will be required to register with SARS to get their reference number. Tax registration can be done online and must be completed within 60 days after the company’s operations have started.
What is a public officer?
- A public officer is responsible for all tax-related matters in the company. In essence, the officer will be the personnel in charge of submitting any returns to SARS. A public officer must be a registered taxpayer with SARS that resides in South Africa.
- All companies are required to appoint a public officer and must notify SARS when there is a change in the officer.
What are the types of companies you can register with the CIPC?
- You can choose to register a private company (Pty Ltd), personal liability company, partnership, or branch in South Africa, depending on your business structure and long-term goals. A private company is the most common choice for foreigners setting up a business in South Africa.
What documents do I need to register a company in South Africa?
- All companies in South Africa require a Memorandum of Incorporation (MOI) to be registered. Tetra Consultants will assist in drafting the documents required to register company in South Africa, which includes a certified identity copy of the applicant, certified copies of the Identity Documents of the Directors and Incorporators, name confirmation certificate (COR9.4) and Power of attorney if applicable. You will also be required to send us notarized passport copies of individual directors and shareholders.
How do I register a Pty Ltd in South Africa?
- The company must have at least one director and shareholder, but no more than 50 shareholders. The director need not be local residents or nationals, and there are no limitations on foreign shareholding.
- A private company will be required to reserve a company name, complete a Memorandum and produce a written consent of the auditor (if any) to act for the company.
- You will have to submit the necessary KYC information, after which Tetra Consultants will assist you to prepare the relevant documents and company registration forms for incorporation. Tetra Consultants will then complete the registration through the CIPC online platform.
