Registering a Business in South Africa. What foreigners need to know.

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And now for the video script... :)

The short answer is Yes! Absolutely, in fact it is quite easy as a foreigner to register a company in South Africa. All you need is a valid passport; you don’t even have to be in the country as it can all be done online, plus you can be the sole director and the 100% shareholder.

Having said that, one of the criteria is that you need a physical South African business address for the company. If you are having problems with this, you can always open a virtual office using companies such as Regus, Cube Workspace or Craft + Graft. They will set you up with your own virtual office allowing you to use their business address for your company. They do however charge monthly fees, so shop around for the best deal.

The company registration is the easy part and should take at most 3 days to be registered, but as you guessed… there is a catch. At this stage you won’t be able to open a bank account or work for your own company. The reason for this is that you will need a business visa from the Department of Home Affairs. This is not so easy to get and takes time as there are many documents to complete. So before registering your company, I would recommend that you simultaneously apply for your business permit as without this permit your company will not be able to operate.

At Home Affairs there are numerous types of visa which foreigners can apply for; namely work visa’s, business visa’s, spousal visa’s, critical skills visa’s, study visa’s and many more. The appropriate visa will depend on your individual circumstances. It is also important to note that each visa can also have specific conditions and restrictions which may impede your ability to work or open a bank account. For example, with a work visa you can only open a personal bank account but not a business banking account.

In this video I will focus on the business visa (also known as the business permit) as this is the only visa which the South African banks will accept to open a business bank accounts for Foreigners in the name as their new South African company. Just to be clear the business visa’s are for foreigners who want to either start their own South African business or invest in an existing South African business.

One of the requirements for the business visa is proof that you have sufficient cash. The intention being that you will not be a burden on the South Africa Government. In most cases this amount is set at R5m but this amount may vary depending on the industry you are operating in; for example the IT, clothing and tourism industries have reduced investment requirement and the amount may even be waived altogether. The actual amounts required are determined by the Minister of Trade and Industry which are published in the Government Gazette. The Department of Home Affairs has outsourced the business visa application process to a private company, called VFS Global.

If you are investing in an existing business, you will also need a temporary residence visa and keep renewing it until your permanent residence is approved.

The South African government would like you to give them an undertaking that 60% of our future staff must be South African and that you will register them with SARS for PAYE and with the department of Labour for COID.

There is a second scenario, and this is if you already have an existing business in your home country and you would like to open a branch or a subsidiary in South Africa you have two options.

Let’s use the example of a company like Tesla. If Elon Musk decides to open a Giga factory in South Africa, he will have two options. Firstly, Tesla can register an External company which is effectively a registered “branch” in South Africa. The directors and shareholders can remain in the country of origin and they appoint a South African resident responsible for the operations and compliance. External companies pay normal company tax currently 27% but no dividend withholding tax.

The next option for a foreigners wanting to open a branch in South Africa is to register a standard private company with the shares held by the overseas company. This is called a subsidiary and in this scenario the company will pay the standard company tax plus dividend withholding tax.

Finally, I would like to clarify that the Business visa from home Affairs must not be confused with the Business permit from the local municipality. The municipal permit is to comply with health and safety if you are selling food directly to the public.