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This publication is available at https://www.gov.uk/government/publications/exporting-to-south-africa/exporting-to-south-africa
1. South Africa export overview
South Africa is a sophisticated and promising market. It has a well developed economic infrastructure and opportunities in its emerging markets.
Contact a Department for International Trade (DIT) South Africa export adviser for a free consultation if you are interested in exporting to South Africa.
There are many UK investors in South Africa, including well known companies like Barclays, BAE Systems, BP, British Airways, Shell, Unilever, Virgin and Vodafone.
Strengths of the South African market include:
- large supply of natural resources
- well established and modern infrastructure
- well developed financial and legal services
- fast growing black middle class
2. Challenges doing business in South Africa
While South Africa is a well developed and promising market, there are some challenges when doing business there. These include:
- high unemployment
- skills and capacity shortages
- infrastructure improvements needed for energy, transport and water
- high crime rate
- Broad-Based Black Economic Empowerment (B-BBEE) legislation
3. Growth potential
South African capital markets are top rated in the world, making it easy to raise financing. South Africa has a strong services sector. The government has set up an infrastructure upgrade programme to reduce infrastructure problems in energy, transport and water. The programme should help create short term employment and help enable the economy to grow in the longer term.
The top sectors include:
- real estate and business services
- general government services
- catering and accommodation
3.1 Economic developments
The South African economy is forecast to grow at around 2% in 2015, up from 1.5% in 2014. This is expected to improve further in 2016 and 2017. However, there are still issues of unemployment, poverty and inequality.
South Africa is the most sophisticated and developed economy in Africa. South Africa is the ‘gateway to Africa’ for investors due to its:
- comparative sophistication
- ease of doing business
- continental expertise
- base for critical services for doing business in the rest of the continent
4. UK and South Africa trade
The UK is a valued trading partner for South Africa, with annual bilateral trade worth just under £10 billion. Department for International Trade (DIT) is focusing on high value and infrastructure opportunities, which are part of the South African government’s development plan.
Top UK exports to South Africa are:
- non-metallic mineral manufactures
- road vehicles
- medicinal and pharmaceutical products
- petroleum and petroleum products
5. Opportunities for UK businesses in South Africa
Department for International Trade (DIT) provides free international export sales leads from its worldwide network. Search for export opportunities.
6. Start-up considerations
The business structures available in South Africa changed in 2011 when the New Companies Act was introduced. The structures available now are:
- private company
- sole proprietor
- public company
- business trust
- non-profit organisation
The private company and sole proprietor are the most common and useful structures for creating a business. Close Corporations (CC) are no longer being registered, but CCs that existed before 2011 can continue to exist.
The choice between the various types of entity will depend on many factors, including:
- the complexity of the business arrangement
- if capital needs to be raised
- the type of enterprise
- if a joint venture is required with local partners
- the ability to meet the South African record keeping and auditing requirements
- the level of taxation for each type of enterprise
Trading names for companies must be registered with the Companies and Intellectual Property Commission (CIPC).
7. Legal considerations
South African business and legal systems are similar to those in the UK. Labour law is governed by many acts that provide a structure for businesses to operate in. You’ll need to be familiar with some labour acts before trading in South Africa.
Contact the Department for International Trade (DIT) team in South Africa to help find tax and legal advisers before entering into agreements.
7.1 Intellectual property (IP)
Read the Intellectual Property Office’s (IPO) guide to managing and protecting your IP in South Africa.
8. Tax and customs considerations
If a company is incorporated in or managed from South Africa, it’s considered to be South African for tax purposes. The question of residency needs to be addressed to avoid double taxation.
In South Africa, the central government levies most direct and indirect taxes. The tax regime is set by the National Treasury and managed by the South African Revenue Services (SARS). SARS collects revenue, ensures compliance with tax laws and regulates and controls customs. The provincial governments and local authorities also have limited taxing rights.
Value Added Tax (VAT) is the principal source of indirect taxation revenue in South Africa. It’s based on the same principles in the UK and there are certain exemptions for VAT.
A vendor must register for VAT if the taxable supplies for a 12 month period have, or are forecast to exceed R1 million per annum. A vendor may also voluntarily register for VAT if the threshold of R50,000 has been exceeded in a 12 month period.
Other taxes include:
- stamp duty
- customs and excise duties
- transfer duty
- capital gains tax
- skills development levy
South Africa has a complex import process. SARS defines approximately 90,000 product tariff codes that are strictly enforced on all imports. You are encouraged to use a reputable customs clearance agent familiar with South African convention.
Contact the Department for International Trade (DIT) team in South Africa for a list of recommended agents.
Customs South Africa (Customs SA), a division of SARS, requires that you register with its office to get an importer’s code. This can cause delays while clearing goods.
Import licenses are required for restricted items. You must have an import permit before the date of shipment. If you don’t, you may have to pay a penalty.
SARS uses a Single Administrative Document (SAD) to allow clearance of goods. The SAD is a multi purpose declaration form covering imports, exports, cross border and transit movements.
You can find more about import tariffs in the Market Access Database (MADB).
9. Entry requirements
9.1 Work permits
If you start a new business, or invest in an existing business in South Africa, you must apply for a business permit. Work permits will only be issued if South African citizens with the required skills are not available.
9.2 Travel advice
If you’re travelling to South Africa for business, check the Foreign and Commonwealth Office (FCO) travel advice page beforehand.
Contact the Department for International Trade (DIT) team in South Africa for more information and advice on opportunities for doing business in South Africa.