South Africa


Executive Summary
The Republic of South Africa is located at the Southern part of the African continent, bordering to Atlantic and Indian Oceans. Namibia, Botswana, Zimbabwe, Mozambique and Swaziland are neighbour states of South Africa; the Kingdom of Lesotho is an enclave.

South Africa became independent in 1961; but despite this the National Party continued the policy of apartheid. Now the country is a part of the Commonwealth of Nations. South Africa is famous for its cultural and religious diversity. The state constitution recognizes eleven official languages: Afrikaans, English, Northern Sotho, Southern Sotho, Swazi, Southern Ndebele, Tsonga, Tswana, Venda, Xhosa and Zulu. Pretoria is executive, Bloemfontein – judicial and Cape town - legislative capitals of South Africa. The law of South Africa is a mix between Roman-Dutch mercantile law and personal English law.

South Africa is a middle-income country with a well-developed financial industry, communications, energy and other resources supply, as well as infrastructure. Its stock exchange is among the top twenty in the world. However, a dual economy makes South Africa a developing country, having one of the highest rates of income inequality in the world. Tourism contributes significantly to the country’s income; tourists from all over the world are attracted by beautiful nature and good local wines. The US, China, Japan, UK, Germany and Spain are main trading partners at the international level. Corn, fruits, diamonds, gold, metals, minerals, wool and sugar are major export categories of South Africa. Machinery, chemicals, petroleum and manufactured goods are the most common imported products.

The Rand (ZAR) is the national currency of South Africa

The coastline of South Africa lays on the Atlantic and on the Indian oceans. It is the 25th largest country of the world. Njesuthi is the highest mountain of South Africa, which raises at 3,408 m above the sea level. There are many micro-climates within the country due to oceanic influence and largely varied topography. However, the state climate is classified as temperate.

Landscape is different as well, rich with cast and flat territories that are changed by tropical vegetation and mountains. Some parts of the country enjoy dry weather, while others are known for heavy rain falls through the year; strong winds are typical to other zones. South Africa is one of 17 countries of the world which are classified as megadiverse. There are more than 20,000 plant species, but only 1% of the country territory is covered by forests. There is a big diversity of animals within the country as well.

Map, Flag and Coat of Arm


Types of Company

Registrar of Companies regulates companies in South Africa; local company law is based on the English company law. Companies can be private and public, locally and foreign-owned entities. In 2009 significant new regulations have been adopted, in order to lighten the regulatory burden on small and medium sized business enterprises, by introducing exemptions from the requirement of auditing annual financial statements for a number of companies, depending on their size, workforce and nature of activities.

Limited Liability Company
Private and public companies can be limited entities. Such a company’s name end with “Ltd” or “Limited”.

Section 53(b) Company
Any private company can specify in its memorandum that the directors of the company are jointly and severally liable for all the debts of the company. Such a company’s name ends with “Inc” or “Incorporated”.

A foreign company may establish its branch in South Africa.

Close Corporation
This is a similar type of structure to a limited company, however, it is not frequently chosen by foreign investors.

Partnerships are not regulated by a statute and are frequently formed by two entities by means of a contract.

Trading Trust
A number of new laws and regulations have been implemented in the last years, making the trust law more adequate to international standards.

Joint Venture
This type of a business organization is often used for the purposes of research and development, national resource exploration, engineering, construction, manufacturing, as well as buying and selling.

International Holding Company
This type of company was aimed to encourage foreign organizations to establish their main office in South Africa, but this type of company is no longer available for incorporation since 2004.


Residents of South Africa are taxed on their world-wide income. An ordinary resident is a person who has continuity of residence within the country, has personal belongings and/or returns there periodically. Personal income tax has a progressive nature in South Africa, reaching a maximum of 40%.Those individuals, the annual income of who is less than ZAR 60,000 are not liable to filing annual tax returns, in case they have no taxable investment income. With a certain exemption approved every year some operations and assets are taxed for capital gains tax purposes at a rate of the income tax; however, only 25% of gains are taxed.

A company is resident in South Africa in case it has been incorporated there or its effective management is conducted from the jurisdiction. Corporation tax in South Africa is of 28% plus 10% of Secondary Tax on Companies, payable on net dividends. To 25% of a company gains a capital gains tax is applied at a rate of 14.5%.

Taxation regime in South Africa is often classified as “problematic”, and it has been experiencing significant reforms in the last years, in order to achieve a more organized taxation system, corresponding to international standards.

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