Business Startup as a foreigner
South Africa
Starting
a business as a foreigner in South Africa can be an arduous task without enlisting
professional help. There are a number of ‘hoops’ that must be circumvented and
the process can be time consuming and a distraction from the all important task
of establishing your business.
At SA
Migration Immigration we have assisted hundreds of entrepreneurs with their
ambition to create a business in South Africa and are able to boast of an
unrivalled track record of success, all based on what we believe to be the most
comprehensive service available.
Below we
detail the important aspects of starting a business as a foreigner in South
Africa but if you prefer to talk to a human being to discuss your needs, feel
free to call us on any our contact numbers
Where to begin with starting a business as a
foreigner in South Africa
Importantly
and before you commit time and money, you should have an assessment of your circumstances and
requirements carried out. Assessments, as with ourselves, should be free of
charge and carry no obligation.
Very
often, and understandably, people source information on the obvious, in this
case the business . There is however a real alternative that should be
considered, if for no other reason to ensure you have made an informed
decision.
Below we
look at the two routes for starting a business as a foreigner in South Africa
and discuss the merits and pitfalls of each.
The different ’s for starting a business as a
foreigner in South Africa
In order
to be able to set up, invest into and work within a business in South Africa as
an immigrant there are two types of you
can apply for:
-
Business – Traditionally, for anyone starting a
business as a foreigner in South Africa this category has been the most
recommended.
-
Independent
Financial Visa – A
very underused Visa category that allows for the holder to commence a
business, but also offers a host of other benefits over the business route.
Who can apply?
Business are for those individuals seeking to invest in
a business, or an existing start up, and who will be working within the
business.
The
Independent Financial skills Visa is a Visa that is not restricted to a certain
economic activity. As such it allows the holder total freedom to invest into a
business, whether they will be working in it or not. There is also no
obligation to invest, or start a business. In short the holder of the
Independent Visa is free to make their own decision as to whether they run a
business, work or even retire.
Must there be local ownership?
No a
business can be owned and run with 100% foreign ownership. However for those
with a local partner this is also fine. This applies to both the business and independent financially independent.
Can I buy into or outright an existing business?
Yes,
which ever Visa or category you select
you can do either or indeed set up one from scratch.
Is there a minimum shareholding a foreigner must
own?
As a
business holder you will need to
typically own in excess of 25% of the business. A Financially Independent Visa
holder has no restrictions.
Is there a minimum amount of investment required?
For
business holders you need to invest ZAR
5 million into the business unless you qualify for a waiver.
You
can read more about the minimum investment amount below .
Investment Waiver Business Application
The
normal requirement for a business dictates a cash investment of R5 million rand
or capital equivalent (in the form of new machinery or equipment.
Certain
business types can however apply for a waiver to reduce this stipulated
investment amount.
The
process for applying for a business waiver will mean the formation and
presentation of a business plan. The business waiver application will be judged
on the various factors in this business plan including:
- Contribution to economy.
- Feasibility of business.
- Jobs created for South
African citizens or permanent residency holders.
- Desirability of the
business.
Most
importantly, the business waiver
application, will have to demonstrate that the business fits into one of the
below categories.
Business waiver applications that may apply for a
waiver (by category)
Agro-processing
- Fisheries and aquaculture
i.e. freshwater aquaculture and marine culture
- Food processing in the
milling and baking industries
- Beverages viz. fruit juices
and the local beneficiation, packaging and export of indigenousteas
- High value natural fibres
viz., organic cotton and downstream mohair production
- High value organic food for
the local and export market
- Biofuels production viz.
bioethanol and biogas
- Processing of seed oils: tea
extracts, including buchu, honeybush: and other oil derivatives(avocado,
amarula etc.)
- Diversification /
beneficiation of biomass sources i.e. sugar, maize
Business
Process Outsourcing and IT Enabled Services
- Call centers
- Back Office Processing
- Shared Corporate Services
- Enterprise solutions e.g.
fleet management and asset management
- Legal process outsourcing
Capital /
Transport equipment, metals and electrical machinery and apparatus
- Basic iron and steel
- Basic precious and
non-ferrous metals
- Casting of metals
- Other fabricated metal
products: metalwork service activities
- General purpose machinery
- Tooling manufacturing
- Foundries
- Electric motors, generators
and transformers
- Electricity distribution and
control apparatus
- Insulated wire and cable
- Accumulators, primary cells
and primary batteries
- White goods and associated
components
Electro
Technical
- Advanced telecommunications
- Software development
- Software and mobile
applications
- Smart metering
- Embedded software
- Radio frequency
identifications
- Process control, measurement
and instrumentation
- Security and monitoring
solutions
- Financial software
- Manufacturing sensors
- Digital TV and Set Top Boxes
due to migration to full digital television
Textile,
Clothing and Leather
- Spinning, weaving and
finishing of textiles
- Knitted and crocheted
fabrics and articles
- Wearing apparel except fur
apparel
- Dressing and dying of fur
- Leather skins and hides
beneficiation
- Consumer goods
- White goods and associated
components
Boatbuilding
Boatbuilding
and associated services industry
- Engines and engine systems
- Marine equipment and
accessories
Pulp,
paper and Furniture
- Manufacture of wood and products
of wood and cork
- Manufacture of articles of
straw and plaiting materials
- Manufacture of paper
products: publishing, printing and reproduction
- Paper and paper products and
furniture
Automotives
and Components
- Engines, radiators, filters
and components thereof
- Air conditioners / climate
control systems
- Alarms and Tracking devices
- Axles, transmission shafts
- Body parts and panels
- Catalytic converters,
silencers and exhaust systems and components
- Seats and parts thereof,
seatbelts, leather covers
- Suspension and shock
absorbers, springs and parts thereof
- Steering wheels, columns and
boxes
- Ignition, starting
equipment, gauges and instrument parts
- Lighting equipment
- Wiring harnesses, instrument
panels vehicle interiors, electronic drive train components,
- Body parts
Green
Economy Industries
Power
generation:
- Independent power
generation, energy infrastructure and alternative energy
- Nuclear Build Programme i.e.
joint ventures, consortiums and the establishment of new companies to grow
South Africa’s nuclear manufacturing capability and nuclear supply
industry to supply into the nuclear build programme
Renewable
Energy:
- Onshore wind power –
manufacture of turbines/blades
- Solar PV and Concentrated
Solar Power manufacture/assembly
- Biomass
- Small hydro
- Energy efficiency and energy
saving industries
- Solar water heaters
- Waste Management and
Recycling
- Reducing landfill
- Lowering greenhouse gas emis
- sions from landfill sites
Advanced
Manufacturing
- Nano-materials
- High performance materials
based on natural resources (advanced bio-compositesAdvanced materials,
polymers and composites
- Medical devices, diagnostics
and composites
- Space e.g. satellite
manufacturers etc. and astronomy e.g. SKA, telescopes, dishes etc.
- Composites (intelligent
textiles used in medical, building and construction industries)
- Continuous fibre reinforced
thermoform composites
- Biochemical and biologics
for applications in agriculture, industry and health/medicalsectors
- Electricity demand Site Management
Solutions to improve electricity efficiency usage
- Lasers and laser-based
additive manufacturing various applications
- Advanced Robotics Mobile
Intelligent Autonomous Systems
- Applications in the mining
industry, data collection and analysis
- Bio – manufacturing –
Biochemical and biologics for applications in agriculture, industryand
health/medical
- Fuel cells and Technology
Tourism
infrastructure
- Accommodation – hotels,
boutique hotels, lodges and resorts
- Urban integrated tourism/
entertainment precincts
- Adventure, – eco-, sport-,
conference- and cultural tourism
- Infrastructure developments
- Leisure complexes and world
class golf courses
- Harbour and waterfront
developments
- Trans frontier conservations
areas
- Tourism transport –
aviation, rail, cruise liners etc.
- green building and green
technologies for tourism attractions and activity – based tourism, museums
and heritage
Chemicals,
plastic fabrication and pharmaceuticals
- Basic chemicals
- Water treatment chemical
products
- Man-made fibres
- Plastic products:
polypropylene and polyvinculchloride
- Medical (drips and
syringes), manufacture of active pharmaceutical ingredient
- (APIs) for key
anti-retrovirals (ARVs)Manufacture of reagents for AIDS/HIV diagnostics
- Production of vaccines and
biological medicines
Creative
and Design Industry
- Film studios, treaty film
co-production ventures, distribution infrastructure
- Servicing of foreign
productions
- Production of film and
documentaries, commercials, stills photography and Multi-media
- Post-production
- Design
- Jewellery manufacturing and
design
- Fashion design
Oil and
Gas
- Maintenance ship and rig
repair
- Fabrication – equipment and
specialised components
- Specialised services –
training and accreditation
- Specialised services –
non-descriptive testing, inspection services, SHEQ services
- Exploration – technical
services: seismic surveys, logging, environmental impact assessments, etc.
- Exploration – offshore
- Exploration – onshore shale
gas
- Exploration – onshore coal
bed methane and underground coal gasification
- Infrastructure – refineries
(Oil and GTL)
- Infrastructure – terminals
LPG/LNG import, storage and distribution
- Infrastructure – ports and
associated infrastructure
- Infrastructure – storage
- Logistics – pipeline
Mineral
beneficiation
Downstream
processing and value addition
Infrastructure
Development
ICT
- IT
- Wireless and Telecom
- Electronics
- Geoamatics and Digital media
- Software Development
- Advanced programming
There is
no requirement for the holder of the Financially Independent Visa to invest any
set amount into as business, they are free to invest as little or as much as
they desire. Note however, to successfully apply for a Financially Independent Visa,
you need to prove a net worth of the equivalent of ZAR12,000,000 (12 million)
but these funds do not need to be brought into South Africa.
Can my partner or children work in the business?
Partners
of the business holder can work in the
business but not for remuneration. Children would not be able to work in the
business unless a work was granted in
their own right. If you have children still in education years a study would be required.
Partners
of Independent Financial Visa holders will need to secure residency in their
own right which would involve a spousal or life partner application. Dependent children would require
a study .
Must I employ South Africans?
There is
a requirement that employees are at least 60% South Africans (citizens or
permanent residency holders). These must be employed on a permanent basis in
the business if you hold a business . There are no such requirements for the
Independent Financial Visa holder.
Can I apply for permanent residency?
Starting
a business as a foreigner in South Africa, via the business route, would first mean obtaining temporary
residency. Once in receipt of this, permanent residency can be applied for.
Independent
Financial Visa applicants may only apply for permanent residency. This of course
has its attractions but the disadvantage can be that permanent residency takes
longer for the Department to process.
What sort of company must I set up?
Typically
a Pty Ltd would be the appropriate company structure and you can read more about the various business structures below .
I am in a permanent relationship / married to a
South African – do I need a business ?
Neither a
business , not an Independent Financial Visa are required if you have a South
African partner. Starting a business as a foreigner in South Africa with a
South African partner requires you to have either a spousal
or life partner which you
can then endorse to set up and run a business.
If I am not working in the business, just
investing, do I need a business ?
Business ’s
are designed for the holder to work in the business. Foreign investors do not
require a business . Any foreigner may own a business with no restriction.
However should they intend to work within the business or come to live in South
Africa a would be required.
How do I prove my business concept and my
credentials?
When
making a business application, part of
the application’s supporting evidence is the submission of a comprehensive
business plan. The business plan purpose
is twofold – one, and in the traditional sense, to prove the business will be
successful, and two, to highlight some of the home affairs requirements.
There is
no requirement for a Financial Independent application to submit a business
plan.
Would my business need to be audited?
There are
requirements for businesses with a certain turnover to be audited and also
others like estate agents are required from a regulatory prospective. There is
also an argument for it being good practise for all businesses to be audited..
The
decision, subject to these rules, is up to the business holder.
Can I set up an NGO in South Africa as a foreigner?
Yes, non
profits are able to set be up
How long does the application process take?
There are
two aspects to the application process:
- The compilation of the or Visa application.The compilation of
the business application is more
time consuming as this stage involves not only the Home Affairs
requirements but also supporting documentation such as the company
registration paperwork and the memorandum of incorporation. In addition
other departments such as the Department of Trade and Industry are
involved. Compilation can therefore take 4 – 12 weeks.
- The Financially Independent
application does not involve such third parties and can therefore be
achieved much quicker.The second stage is the submission to the Department
of Home Affairs and the Departments timing can vary from 4 weeks to 12
weeks usually for a business .
Here there
can be a potential drawback for applicants for the Financially Independent as
these have historically taken approx 9 months.
Is there any other important distinctions?
You can see here below for a summary breakdown of the business versus the Independent Financial Visa.
But in summary, whilst the independent financial Visa is a lot more flexible
and carries little obligations with it either initially or on an ongoing basis
there are 2 considerations that must be taken into account:
- The timing of your move.
Permanent residency applications (Independent Financial Visas) take longer
to process. If you plan in ample time this can be mitigated.
- The Department of Home
Affairs levies an additional charge for successful applicants of the
Independent Financial Visa of ZAR 120,000. This is almost akin to a
success fee as it is only payable if your application is approved.
Starting a Business as a
foreigner in South Africa
Starting a Business as a
foreigner in South Africa
Starting
a business as a foreigner in South Africa can be an arduous task without enlisting professional
help. There are a number of ‘hoops’ that must be circumvented and the process
can be time consuming and a distraction from the all important task of
establishing your business.
At SA
Migration Immigration we have assisted hundreds of entrepreneurs with their
ambition to create a business in South Africa and are able to boast of an
unrivalled track record of success, all based on what we believe to be the most
comprehensive service available.
Where to begin with starting a business as a
foreigner in South Africa
Importantly
and before you commit time and money, you should have an assessment of your circumstances and
requirements carried out. Assessments, as with ourselves, should be free of
charge and carry no obligation.
Very
often, and understandably, people source information on the obvious, in this
case the business . There is however a real alternative that should be
considered, if for no other reason to ensure you have made an informed
decision.
Below we
look at the two routes for starting a business as a foreigner in South Africa
and discuss the merits and pitfalls of each.
The different ’s for starting a business as a
foreigner in South Africa
In order
to be able to set up, invest into and work within a business in South Africa as
an immigrant there are two types of you
can apply for:
-
Business Visa –
Traditionally, for anyone starting a business as a foreigner in South
Africa this category has been the most recommended.
-
Independent
Financial Visa – A
very underused Visa category that allows for the holder to commence a
business, but also offers a host of other benefits over the business route.
Who can apply?
Business are for those individuals seeking to invest in
a business, or an existing start up, and who will be working within the
business.
The
Independent Financial skills Visa is a Visa that is not restricted to a certain
economic activity. As such it allows the holder total freedom to invest into a
business, whether they will be working in it or not. There is also no
obligation to invest, or start a business. In short the holder of the Independent
Visa is free to make their own decision as to whether they run a business, work
or even retire.
Must there be local ownership?
No a
business can be owned and run with 100% foreign ownership. However for those
with a local partner this is also fine. This applies to both the business and independent financially independent.
Can I buy into or outright an existing business?
Yes,
which ever Visa or category you select
you can do either or indeed set up one from scratch.
Is there a minimum shareholding a foreigner must
own?
As a
business holder you will need to
typically own in excess of 25% of the business. A Financially Independent Visa
holder has no restrictions.
Is there a minimum amount of investment required?
For
business holders you need to invest ZAR
5 million into the business unless you qualify for a waiver.
There is
no requirement for the holder of the Financially Independent Visa to invest any
set amount into as business, they are free to invest as little or as much as
they desire. Note however, to successfully apply for a Financially Independent Visa,
you need to prove a net worth of the equivalent of ZAR12,000,000 (12 million)
but these funds do not need to be brought into South Africa.
Can my partner or children work in the business?
Partners
of the business holder can work in the
business but not for remuneration. Children would not be able to work in the
business unless a work was granted in
their own right. If you have children still in education years a study would be required.
Partners
of Independent Financial Visa holders will need to secure residency in their
own right which would involve a spousal or life partner application. Dependent children would require
a study .
Must I employ South Africans?
There is
a requirement that employees are at least 60% South Africans (citizens or
permanent residency holders). These must be employed on a permanent basis in
the business if you hold a business . There are no such requirements for the Independent
Financial Visa holder.
Can I apply for permanent residency?
Starting
a business as a foreigner in South Africa, via the business route, would first mean obtaining temporary
residency. Once in receipt of this, permanent residency can be applied for.
Independent
Financial Visa applicants may only apply for permanent residency. This of
course has its attractions but the disadvantage can be that permanent residency
takes longer for the Department to process.
I am in a permanent relationship / married to a
South African – do I need a business ?
Neither a
business , not an Independent Financial Visa are required if you have a South
African partner. Starting a business as a foreigner in South Africa with a
South African partner requires you to have either a spousal
or life partner which you
can then endorse to set up and run a business.
If I am not working in the business, just
investing, do I need a business ?
Business ’s
are designed for the holder to work in the business. Foreign investors do not
require a business . Any foreigner may own a business with no restriction.
However should they intend to work within the business or come to live in South
Africa a would be required.
How do I prove my business concept and my
credentials?
When
making a business application, part of
the application’s supporting evidence is the submission of a comprehensive
business plan. The business plan purpose
is twofold – one, and in the traditional sense, to prove the business will be
successful, and two, to highlight some of the home affairs requirements.
There is
no requirement for a Financial Independent application to submit a business
plan.
Would my business need to be audited?
There are
requirements for businesses with a certain turnover to be audited and also
others like estate agents are required from a regulatory prospective. There is
also an argument for it being good practise for all businesses to be audited..
The
decision, subject to these rules, is up to the business holder.
Can I set up an NGO in South Africa as a foreigner?
Yes, non
profits are able to set be up.
How long does the application process take?
There are
two aspects to the application process:
- The compilation of the or Visa application.The compilation of
the business application is more
time consuming as this stage involves not only the Home Affairs
requirements but also supporting documentation such as the company
registration paperwork and the memorandum of incorporation. In addition
other departments such as the Department of Trade and Industry are
involved. Compilation can therefore take 4 – 12 weeks.
- The Financially Independent
application does not involve such third parties and can therefore be
achieved much quicker.The second stage is the submission to the Department
of Home Affairs and the Departments timing can vary from 4 weeks to 12
weeks usually for a business .
Here
there can be a potential drawback for applicants for the Financially
Independent as these have historically taken approx 9 months.
Is there any other important distinctions?
You can see here for a summary breakdown of the business versus the Independent Financial Visa.
But in summary, whilst the independent financial Visa is a lot more flexible
and carries little obligations with it either initially or on an ongoing basis
there are 2 considerations that must be taken into account:
- The timing of your move.
Permanent residency applications (Independent Financial Visas) take longer
to process. If you plan in ample time this can be mitigated.
- The Department of Home
Affairs levies an additional charge for successful applicants of the
Independent Financial Visa of ZAR 120,000. This is almost akin to a
success fee as it is only payable if your application is approved.
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