South Africa

General Information Banking
Business Etiquette Tips Embassy Locations and Registration
Employment-Legal Requirements Entry and Exit Requirements
Intellectual Property Legal and Registration of a Business Entity
Safety and Crime Taxes

General Information

South AfricaSouth Africa is a country of two distinct personalities still emerging from the constraints of apartheid. It is both a sophisticated, developed country and a struggling nation whose citizens live in extreme poverty due to generations of inequitable distribution of wealth and power.

The postapartheid, democratic government in power has made significant strides in improving education, living conditions, and creating opportunities for all citizens. Unfortunately it is predicted that it will be some time before the country overcomes the legacy left by its history of apartheid and success can be claimed in key areas of education, formal employment, and peace along racial lines. 

Recognized as the "super power" of Africa, South Africa is a country rich in natural resources and minerals that help maintain the positive impression that many hold of the country. The country attracts travelers to visit and take advantage of its many beautiful beaches, game parks, world-class hotels, and other cultural and natural sites.

There may be political unrest and/or targeted crime against visitors to the country.  Travelers should check with the U.S. State Department Web site for current travel safety information.

Major Cities Capital:  Pretoria (administrative capital); Cape Town (legislative capital); and Bloemfontein (judicial capital)
Major cities:  Durban, Port Elizabeth.
 
Official Currency
South African Rand (ZAR)
Time Zone UTC+2 (7 hours ahead of Washington, D.C. during Standard Time).
Language Official languages:  IsiZulu, IsiXhosa, Afrikaans, Sepedi, English, Setswana, Sesotho, Xitsonga, Other (7.2 percent).  English is the main language of business.

  
Legal System and Government

Type of Legal System

The South African legal system is based on Roman-Dutch law and English common law. It has not accepted compulsory International Court of Justice (ICJ) jurisdiction.

Form of Government

Republic

South Africa is a multiparty parliamentary democracy in which constitutional power is shared between the president and the Parliament.

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Banking

South African banking regulations rank among the best in the world. The sector has long been rated among the top 10 globally. Some of the world's leading institutions have announced their intention to enter the local banking sector through mergers and acquisitions.

Available Banking Services

ATMs
Online banking
Banking in English
Overdraft protection

Bank Holidays

New Year's Day  
Good Friday and Human Rights Day   
Family Day  
Freedom Day  
Labor Day  
Bank Holiday   
Youth Day
National Women's Day
Heritage Day
Day of Reconciliation
Christmas Day
Day of Goodwill                                           

U.S. and Other Major Banks in Country

(Note: Address and contact information subject to change.)

Citi
145 West Street
Sandown, 2196
Johannesburg, South Africa
Phone:  (27) 11 944 1000
Fax: (27) 11 944 1010
Web: http://www.citi.com/southafrica/homepage/

Standard Chartered
3rd Floor, No. 2 Merchant Place, 
1 Fredman Drive, Sandton 2196
Gauteng, South Africa
Phone: (27) 112176600
Fax: (27) 112176601
Web: http://www.standardchartered.co.za/

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Business Etiquette Tips

Business Attire

Business dress for initial meetings tends to be formal and conservative for both men and women. Subsequent meetings may be more business casual.

Business Negotiations

Although long-standing relationships are not necessary for small business transactions, for more involved or long-term negotiations expect to spend some time establishing trust and building a relationship. Start with realistic pricing as South Africans dislike extensive haggling and prefer compromise and win-win outcomes. 

Proper Greetings

The majority of South Africans shake hands, but some women may prefer to just nod their heads. It is best to wait for women to initiate a handshake.

Public and Social Behavior

Promptness is appreciated both in social and business engagements. For a social engagement, bringing your host a small, thoughtful gift shows appreciation.

Scheduling Appointments

Appointments should be scheduled a minimum of one week in advance and only if necessary. As in the United States it is best to schedule around school vacations as this is the time of year when many business people take their annual vacations.

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Embassy Locations and Registration

(Note: Address and contact information subject to change.)

Republic of South Africa in the United States
3400 International Drive NW
Washington, D.C. 20008
Phone: (202) 232-4400
Web:  http://www.saembassy.org

U.S. Embassy in South Africa
877 Pretorius St, Pretoria
PO Box 9536, Pretoria 0001
Phone: (27-12) 431-4000
Fax:    (27-12) 342-2299
Web:  http://southafrica.usembassy.gov/

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Employment-Legal Requirements

A typical work week is comprised of 45 hours worked either in a five- or six-day week for full-time employees. Overtime is permitted with restrictions of no more than 12 hours in any one day or a maximum of 15 hours in a given week. Overtime is payable at time and a half of an employee's normal salary. An employee required to work an occasional Sunday is entitled to pay at double their normal salary, whereas employees who work Sundays normally are to be paid at time and a half. 

Upon the start of employment, employers are required to give all employees a written contract specifying all particulars of employments including the length of the contract, remuneration, hours, leave, and amount of notice required for termination of same.

Terminating Employees

Either the employer or employee may terminate employment by providing appropriate written notice based upon the length of employment. Employees employed for six months or less require a one-week written notice. Those employed for less than one year but more than six months should either give or receive two weeks notice. And for situations where employment has been continuous for one or more years, four weeks notice is required. In termination cases that are the result of layoffs, a one-week severance is due for every year worked. 

Legally Mandated Benefits and Leave

Annual Vacation Leave 21 days (consecutive)
Family leave*    3 days maximum (every 12 months)
Sick Leave 1 day every 26 days (during first 6 months of employment)
Total of 6 weeks in a 3-year period
Maternity Leave 4 months (consecutive)

*Family leave covers funeral leave of a family member, the birth of a child, or to care for a sick child.

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Entry and Exit Requirements

It is recommended that the passports of all travelers to South Africa contain at least two completely blank (unstamped) visa pages each time entry is sought. These pages are in addition to the endorsement/amendment pages (as many as four) at the back of the passport. Travelers lacking adequate blank pages in the passport may be refused entry into South Africa, fined, and returned to their point of origin at the traveler's expense.  As a general precaution, all travelers are advised to carry a photocopy of the photo/bio information page of their passport and keep it in a location separate from the passport.

United States visitors to South Africa for tourism, short business meetings, or those in transit do not require visas for stays of up to 90 days if they posses a valid passport with at least one blank page remaining. In the event that a traveler overstays that period without a permit issued by the South African Department of Home Affairs, they may be subject to a fine.  All others, including academics, students on educational trips, and volunteers, may need visas.  Americans who intend to work in South Africa must apply for work permits before arrival. Otherwise they risk being refused admission and returned to their point of origin. 

It is strongly suggested that all travelers check the latest requirements with the nearest South African Embassy or Consulate before traveling.

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Intellectual Property 

South Africa is not a member of either the African Regional Intellectual Property Organization (ARIPO) or the African Intellectual Property Organization (OAPI) but is a member of the International Patent Convention (also referred to as the Paris Convention), the Berne Convention, the World Intellectual Property Organization (WIPO) Convention, World Trade Organization, and signatory to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and a contracting state of the Patent Cooperation Treaty (PCT).

Foreign patent applications must be filed within 12 months of the filing date of the first patent application for the invention if the original filing date (known as the priority date) is to be retained internationally. 

Intellectual property law is well established in South Africa and detailed information can be obtained from the South African Institute for Intellectual Property Law Web site. 

Nature of Rights and Terms

Patents

The grant of a South African patent gives a patentee the right to prevent others from making, using, exercising, disposing of, offering to dispose of, or importing the patentee's invention. The term of a South African patent is 20 years, subject to annual renewal after the third year.

International Patent Applications

In South Africa, it is possible to file a provisional patent application, a complete patent application, or a Patent Co-operation Treaty (PCT) International Patent Application, which also designates South Africa. Ideas not fully finalized in detail are protected via the provisional patent application. Doing so serves as the first step in obtaining patent protection while providing 12 months to refine the invention. The provisional patent application is an important document, and it later forms the basis for the fully completed patent application. It should be drawn up professionally and contain as much detail as possible.

Industrial Design Patents

A registered design is a statutory monopoly granted by the Designs Office on behalf of the state that allows the proprietor of the registered design to stop others from exploiting the specific appearance of an article for a limited period of time.

There are two types of designs that may be registered: an aesthetic design and a functional design.  An application for both an aesthetic design and a functional design may be lodged in respect of the same article. In the case of an aesthetic design, protection is provided for 15 years from the date of filing at the Designs Office, and in the case of functional designs protection is provided for 10 years from the registration date.

Trademarks

A "mark" is defined as any sign capable of being represented graphically, including a device, name, sig­nature, word, letter, numeral, shape, configuration, pattern, ornamentation, color, or container for goods, or any combina­tion thereof.  A "device" is defined as any visual representation or illustration capable of being reproduced upon a surface, whether by print­ing, embossing, or by any other means. A trademark is registered for a period of 10 years, calculated from the filing date, and it can be renewed in perpetuity for further 10-year periods upon payment of renewal fees. Registering a trademark can take between 20 to 30 months (or more) from the date of filing.

Copyrights

While copyright protection is automatically provided at the time of creation, registration is provided only for cinematographic films. Registration for all other copyrighted works is not required or available. It is incumbent upon the creator to maintain necessary proof should infringement occur. The duration of a copyright term is typically the life of the author plus 50 years from the end of the year in which the author dies. For cinematograph films, photographs, and computer programs the term is 50 years from the end of the year in which the work is made available to the public or is made (where no publication takes place). In the case of sound recordings and published editions the term is 50 years from the end of the year in which the recording or edition is first published.

Enforcement

A plaintiff for infringement of a registered industrial design, patent, trademark, or copyright is entitled to relief in the form of a court-ordered injunction, requirement to surrender all products and byproducts or articles of the infringing product, payment of damages, and/or in lieu of damages an amount calculated on the basis of a reasonable royalty that would have been payable and due by a licensee of the registered design.

The court may also, taking into account the flagrancy of the infringement and the benefit shown to have accrued to the defendant, award such additional damages as the court may deem fit.

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Legal and Registration of a Business Entity

The most common vehicle to conduct business operations in South Africa is the limited (or private) company. Other forms of business operation are a close corporation, partnership, sole proprietorship, or external company.  

A branch of a foreign company is regarded as an "external company" if it establishes a place of business or owns immovable property in South Africa, and it must register as such. The legal liabilities of a branch are not limited to the extent of its South African assets.

The "external" company is required to appoint a South African resident who is authorized to accept notices served on the company. Once registered, the "external" company will effectively be treated under South African law as a South African incorporated company and may be sued in South Africa. A subsidiary of a foreign company is also regarded as a South African company. 

Both a South African company and a branch operation are subject to the provisions of the Companies Act. A branch must lodge a certified copy of its Memorandum and Articles of Association (or other instrument defining its constitution) with the Registrar of Companies, along with a notarized English translation. 

Registration Formalities (Including Timing)

The World Bank estimates that it takes about a month and five fairly straightforward steps to register a business in South Africa. The steps required are listed here and can be found in more detail on the World Bank's Web site or through the Department of Trade and Industry. Briefly, the steps required to start a business are:

  1. Lodge formation documentation with the Companies and Intellectual Property Commission (CIPC) for registration.
  2. Open a bank account.
  3. Register with the office of the local receiver of revenue (SARS) for income tax, VAT, and employee withholding tax (PAYE and SITE).
  4. Register with the Department of Labor for Unemployment Insurance.
  5. Register with the Commissioner according to the Compensation for Occupational Injuries and Diseases Act. 

(Source:  The World Bank, Doing Business - South Africa)

Below is an additional listing of resources to assist in establishing an office and employing workers.

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Safety and Crime

Many travelers travel to South Africa with little incident, but criminal activity is on the rise, and individuals should remain vigilant at all times. The government has enacted several anticrime efforts, but violent crimes and other incidents are regularly reported by visitors and resident Americans. 

Due in large part to large unemployment numbers, criminal activity in the form of organized crime and gangs takes place on a fairly regular basis. Automated teller machines (ATMs) have increasingly been targeted by criminals. Credit card fraud, counterfeit U.S. currency, and various check-cashing scams are frequently reported. Do not accept "assistance" from anyone or agree to assist others with ATM transactions.

Approximately one-quarter of the population of South Africa is infected with HIV, the virus that causes AIDS. Public awareness in the country as to how to protect against infection is increasing.

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Taxes

The tax year for residents officially ends February 28th. A double-taxation agreement exists between South Africa and the United States. Treaty residence overrides the local residence laws (i.e., in terms of a treaty, if a taxpayer is not treaty resident in South Africa, but meets the local requirements for tax residency, the taxpayer will not be tax resident in South Africa). All income received during the tax year is taxable whether it is derived in cash or in kind.

Payment of both individual and corporate tax responsibilities can be a complicated procedure. Please be certain to review all applicable guidelines online at the South African Revenue Service and receive both legal advice and consultation from a professional tax preparer to prevent inaccuracies from occurring. 

Individual and Employee Taxation

Determining Tax Residence

An individual who takes up permanent residence in South Africa or who was physically present in South Africa for more than 91 days in the current tax year and each of the preceding five tax years (six years total), and for a period of more than 915 days in total, is considered a resident. A person who is physically present in South Africa for the required periods will also be considered a resident from the first day of the tax year in which all the requirements were met. 

The gross income of a resident is the total amount, in cash or otherwise, derived by the resident. Residents pay tax on their worldwide taxable income. In South Africa, every natural person or business entity deriving taxable income is liable to pay tax.  Individuals, companies, close corporations, estates of insolvent persons, estates of deceased persons, clubs, associations, trusts, and other legal entities with a taxable income therefore are obligated to pay income tax.

Nontax Resident Employees

Nonresidents pay tax only on income sourced in South Africa or on interest or gains received from "immovable property or assets from a permanent establishment in South Africa." But if an individual is outside of South Africa for 183 days or longer and doesn't conduct business within the country, he is not liable for tax on any interest earned, even if it was from a South African source. 

Corporate Tax Responsibilities

Nonresident companies or branch offices are assessed a corporate tax. The tax applies to resident corporate entities on all income (both foreign and South African sourced). This rate is assessed upon all entities deemed to be resident, defined as being incorporated, established, or formed in South Africa, or having "day to day" management take place within South Africa.  Nonresident companies or branch offices are assessed a tax rate slightly higher than that of resident companies, but only income derived from South African sources is considered taxable.

If a subsidiary or branch employs personnel it must register as an employer with the revenue authorities and deduct tax (PAYE) from all payments made to employees. Employers and their employees are each responsible for equal payment into the Unemployment Insurance Fund. If a company sells goods or provides services, it must also register as a vendor and charge a value-added tax at the current rate. Exports, certain foodstuffs, and other supplies are zero rated, and certain supplies are exempt.

A thorough explanation of all South African tax rates can be found on the South African Revenue Service Web site.

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Online Resources Used for This Template

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