SA Migration International

Business Startup as a foreigner South Africa

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:
1. Business – Traditionally, for anyone starting a business as a foreigner in South Africa this category has been the most recommended.
2. 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:
1. 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.
2. 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:
1. 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.
2. 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:
1. Business Visa – Traditionally, for anyone starting a business as a foreigner in South Africa this category has been the most recommended.
2. 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:
1. 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.
2. 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:
1. 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.
2. 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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