Foreign investors who wish to conduct business with registering their companies in South Africa in two ways. Initially, investors can register their company through setting a subsidiary company or “External Company” according to the Company Act (Section 23). If the foreign investors don’t have any visa of South Africa, it is recommended for them to take the initiative of company registration South Africa by an external company otherwise they will face problem in the registration process.
South African visa will not be required in the time of incorporation for external company for the foreigners. The investors should inform to the Companies and Intellectual Property Commission (CIPC) about their intention to operate business in a formal manner within 20 days and the time will be started to count from the starting day of conducting business in South Africa. The company will be a party to maintain the employment contract or act to continue operation in South Africa, this is the pre-condition according to company act.
The requirements for the foreign based companies were not that much difficult in course of company registration South Africa according to Old Companies Act in South Africa. The foreign companies which want to start business in South Africa must establish a place of business from where the investors or their appointed managers can conduct the business properly. Besides, the foreign companies must pay R400 as registration fee with filling the Form CoR20.1. The copy of Memorandum of Incorporation (MOI), registration certificate and some other important documents should be submitted to the certain authority stated as the Companies and Intellectual Property Commission (CIPC).
In the Form CoR20.2, CIPC will issue a registration certificate to the external company and the external company can run their business. As dual taxation system is not existed with all countries in South Africa, foreign investors should take professional advice when they wish to establish external companies. If the dual taxation treaty is not available to the foreign country with South Africa, the external company can end up pay income tax which will be damning for the foreign company in terms of their success.
There is a misconception hanging over the common people that companies which wish to start business in South Africa always need to have a business visa in the purpose of applying for their company registration. On the other hand, those investors who wish to establish a business on their own self, they should apply for the business visa following the South African business visa requirements.
When the business is being set up as part of a wider group in South Africa, business visa will not be required in that time. For example, a foreign entity which has taken an initiative to start business in South Africa as a branch or subsidiary with wider range of operations. On the other hand, the investors invest into a business but working permission will not be required for the branch office or external company.
Business visa requirements are the important issues in South Africa though another important thing is to set up business. The first step in setting up a business in South Africa as a foreign entity is to decide on a company structure which is important for the foreign investors as tax implications and foreign exchange control implications are related with this. The investors should take the help from consultancy to guide in the registration process properly.
The first task for the foreign investors is to establish an external company or subsidiary company registration South Africa as alternative which is already mentioned with description. A thing is very common for foreign companies to start business in South Africa with having a requirement to relocate some of their existing staff to South Africa and in terms of staff relocation, it is required a work visa of some description where several options for securing these.
There is no requirement for the business regardless the branch office or subsidiary company creating profit where profit will not be repatriated abroad. A registered external company will face different tax implications in South Africa and 28% of the tax will be imposed on its South African profits where Dividend Withholding Tax will not be applied.
The following tax considerations would apply to a subsidiary company where tax rate will be imposed on a flat rate of 28% and DWT will be incurred on 15% dividends which has already been declared with some countries will get 5% low consideration due to dual taxation treaty. Registered external company and private company both can apply for the Capital Gains Tax where private company applies trough branch that the asset disposed to the permanently settled in South Africa.
When the outsiders who don’t have any citizenship in South Africa make investments through the acquisition of shares, the corresponding share certificates must be carried out by them. The South African company (have citizenship of South Africa) can send remit dividends freely to the other countries’ shareholder where the shareholder of outsiders can freely repatriate the sale proceeds of shares in their own resident company. You may like to know more information of South Africa foreign company registration process, if so, will guide you accordingly.