South Africa: Tax-free Zone for Non-resident Business

The Republic of South Africa is called the financial center of Africa, because thanks to liberal regulation in the field of investment and tax activity, all conditions for business development are created in this country. This state is the only African member of G20.

Law&Trust International is one of the leading companies in the international market, so you can entrust the establishment and comprehensive support of business in South Africa to our lawyers. You can find more details about the registration of the company by clicking on the link: https://lawstrust.com/registratsiya-kompanii/za

The main advantage of the Republic of South Africa is its flexible tax system, due to which, subject to certain conditions, companies in South Africa can be exempt from taxation. South Africa is not considered a classic offshore jurisdiction and is not included in the “black lists”.

Companies in South Africa that do not operate in the country, as well as holding companies, are not taxed domestically. At the same time, companies are required to report on the financial condition of the company - in this case, the reporting will be “zero”. It should be noted that capital gains are not taxed (unless the company’s assets are purposely acquired for resale with profit). Dividend income from foreign or South African companies is also exempt from tax.

All types of companies in South Africa fall under this rule. A very popular legal form is a limited liability company - Private Company Limited by Shares. Such a company is often used as a tool for conducting tax-free business for import-export schemes. Nevertheless, this legal form can also be used as an opportunity for business development in South Africa for trade with countries that are members of the Southern African Development Community - SADC. SADC is a trade and economic union of the countries of Southern Africa, currently it unites 15 states: Angola, Botswana, Zambia, Zimbabwe, DRC, Lesotho, Mauritius, Madagascar, Malawi, Mozambique, Namibia, Swaziland, Seychelles, Tanzania, South Africa. In the case of doing business in South Africa, the corporate tax is 28%. A private limited company is the most common and understandable form for local entrepreneurs, so if you plan to work with partners from South Africa, then this type of company is for you.

It is important to note that such a company cannot be engaged in banking, insurance, trust business, fund management, asset management (with the exception of managing its own assets). PTY companies are prohibited from publicly selling or offering shares.

A PTY company must have at least one director and shareholder. There are no residency requirements for these individuals. The number of shareholders may not exceed 50. The company name must end with “Proprietary Limited” or “PTY Limited”.

A registration address in South Africa is a mandatory requirement. The PTY organizational form provides for the personal responsibility of the director for the debts of his organization, as well as in relations with potential contractors.

When establishing a company in South Africa, it is not necessary to pay the authorized capital. The standard authorized share capital is 1,200 shares with a par value of 1 South African rand per share.

Be sure to hold annual meetings of shareholders of the company, as well as submit annual reports. The first fiscal year of the company lasts no less than 6 or no more than 18 months from the date of registration. Reports are stored at the legal address indicated in the Register. The start date of the reporting period for each company is assigned by the Register, and it usually falls on the last day of the month in which the company was registered.

Another popular legal form is a public company. It is very often used to create a holding structure. Holdings do not have to pay tax on the income of their foreign affiliates, on the payment of dividends received by the foreign affiliate of the holding, and indirect taxes that are declared in South Africa. The requirements for the company are very similar to the requirements for a private company in South Africa.

Law & Trust International will advise you on doing business in South Africa. We will also help you with the quick registration of a company in the Republic of South Africa with minimal time and efforts.