SOUTH AFRICA

 

i. Name of country

SOUTH AFRICA

ii. Region

Southern Africa, at the southern tip of the continent of Africa

iii. Population

56,978,635 (July 2021 est.)

iv. General Introduction

For many wealthy South Africans, investing in real estate to obtain a golden visa is an appealing option. A number of European and Caribbean countries offer residency, as well as a second passport and citizenship. La Vida has assisted many South African clients with sufficient funds to invest in obtaining a second residency through real estate investment. In fact, South Africa continues to be one of our top countries for inquiries from high net worth clients (HNWs) looking for a more permanent solution to their travel and future residency requirements.

South Africa is the economic hub of Africa and has a well-developed infrastructure. South Africa has various economic references that have led the country to macro-economic stability, such as good fiscal management and a sound monetary policy. Tax and customs reductions are an added advantage.

South Africa is rich in natural resources such as chrome, manganese, gold, coal, iron ore, vanadium, vermiculite and platinum. It is also involved in and is a perfect platform for the development of the new generation of green technologies and industries.

The market will be affected by the South African political landscape. Stability in politics will positively affect the economic climate and the markets, especially the commodities and equity markets. The 2017/2018 financial year was characterised by the property sector as the most active sector and the renewable energy sector as the least active sector, as opposed to the 2016/2017 financial year, which was characterised by the manufacturing sector as the most active sector and activities centred around households as the least active. The 2018/2019 financial year was characterised by agriculture, forestry and fishing; and mining showing contraction in growth, whereas finance, real estate and business services; general government services; and personal services showed marginal growth.

v. Wifi Speed

According to the report, SA has a mean download speed of 19.94Mbps and the average time it takes to download a typical 5Gb movie in the country is 34min 15sec. Cable's 2018 report showed SA had a mean download speed of 6.38Mbps.

vi. Electrical outlet

South Africa operates on a 230V supply voltage and 50Hz.

vii. Per Capita GDP

Real GDP per capita
$680.04 billion note: data are in 2017 dollars (2020 est.)
$730.91 billion note: data are in 2017 dollars (2019 est.)
$729.8 billion note: data are in 2017 dollars (2018 est.)

note: data are in 2010 dollars

viii. Climate

mostly semiarid; subtropical along east coast; sunny days, cool nights

ix. Residence-by-Investment

Temporary Visa

Business Visa

  • Capital contribution of not less than R 5 million in new machinery or equipment in a new or existing business60% of total staff shall be citizens or permanent residents as permanent employees

Retired Persons’ Visa

  • Minimum monthly income of R 37,000 for the applicant derived from pension/irrevocable annuity/retirement accounts or combination of assets, or the applicant’s net worth.

Permanent Residence Permit

  • On basis of establishing a new business or investing in an existing business in South Africa
  • Capital contribution of not less than R 5 million in new machinery or equipment in a new or existing business60% of total staff shall be citizens or permanent residents as permanent employees
  • On basis of retirement in South Africa
  • Minimum monthly income of R 37,000 for the applicant derived from pension/irrevocable annuity/retirement accounts or combination of assets, or the applicant’s net worth.
  • On basis of Net Worth
  • Minimum net worth of R12 Million with R120 000 payable to the Director-General immediately upon approval of the residence permit application.

Processing Time

South Africa Investor Residency

Temporary Business Visa - Average 8 weeks
Temporary Retired Persons’ Visa - Average 8 weeks
Permanent Residence Permit - Minimum of 8 months

Key Benefits

  • A developed economy with numerous investment opportunities
  • Modern and effective transport infrastructure with good connectivity to all developed countries.
  • A plural society with strong commitment to democracy and good governance.
  • Access to quality healthcare, education, and productive lifestyle.
  • Option of applying for citizenship after obtaining the permanent residence permit.

Requirements

  • Duly completed application form
  • A valid passport or other documentary proof of identity
  • Original or Certified copy of full birth certificate
  • Proof of change of name or gender if applicable
  • Radiological report for all applicants aged 12 years or more except for pregnant women
  • Medical Certificate
  • Police clearance certificate for all applicants aged 18 years of age and above
  • Proof of marriage or cohabitation
  • Proof of divorce or legal separation, or death of spouse where applicable
  • Consent of both parents in event applicant is a parent of a minor child
  • Proof of educational, trade or professional qualifications
  • Proof of payment of fees and charges.
  • Proof of compliance with the investment requirements prescribed for the various visa and permanent residence permit options.

xi. Natural Resources

gold, chromium, antimony, coal, iron ore, manganese, nickel, phosphates, tin, rare earth elements, uranium, gem diamonds, platinum, copper, vanadium, salt, natural gas

xii. Ethnic Groups

Black African 80.9%, Colored 8.8%, White 7.8%, Indian/Asian 2.5% (2018 est.)

note: colored is a term used in South Africa, including on the national census, for persons of mixed race ancestry who developed a distinct cultural identity over several hundred years

xiii. Languages

isiZulu (official) 25.3%, isiXhosa (official) 14.8%, Afrikaans (official) 12.2%, Sepedi (official) 10.1%, Setswana (official) 9.1%, English (official) 8.1%, Sesotho (official) 7.9%, Xitsonga (official) 3.6%, siSwati (official) 2.8%, Tshivenda (official) 2.5%, isiNdebele (official) 1.6%, other (includes Khoi, Nama, and San languages) 2%; note - data represent language spoken most often at home (2018 est.)

xiv. Religion

Christian 86%, ancestral, tribal, animist, or other traditional African religions 5.4%, Muslim 1.9%, other 1.5%, nothing in particular 5.2% (2015 est.)

xv. Median Age

total: 28 years
male: 27.9 years
female: 28.1 years (2020 est.)

xvi. Urbanization

urban population: 67.8% of total population (2021)
rate of urbanization: 1.72% annual rate of change (2020-25 est.)

xvii. Physician density

0.91 physicians/1,000 population (2017)

xviii. Government type

parliamentary republic

xix. Unemployment Rate

28.53% (2019 est.)
27.09% (2018 est.)

x. Taxes

Headline Personal Income Tax Rate (highest marginal tax rate

  • 45%

From 2001, South Africa moved from a source-based income tax system to a residence-based income tax system. Residents (juristic and non-juristic) are (subject to certain exclusions) taxed on their worldwide income, irrespective of where the income is earned. However, source-based income continues to be relevant since persons that are not resident in South Africa are subject to tax in South Africa on all income that is from a South African source.

For individuals, the following two tests apply in order to determine whether or not an individual is a resident in South Africa for tax purposes:

  • The "ordinarily resident" test.
  • The "physical presence" test.

A person is considered to be ordinarily resident in South Africa if that person considers South Africa to be his principal residence, which could be described, in comparison to other countries, as the individual's real home. Persons who are not ordinarily resident in South Africa are only considered resident for South African tax purposes by virtue of their physical presence in South Africa. With the physical presence test, a person is deemed to be a resident for South African tax purposes if they are physically present in South Africa for a period or periods exceeding:

  • 91 days in total in each of the current and previous five tax years.
  • More than 915 days in total during the previous five tax years.

If a person that is deemed to be a resident in terms of the physical presence test leaves South Africa for a continuous period of 330 full days, he or she is deemed to be no longer resident from day one of the 330 day period. However, the term "resident" excludes any person who is deemed to be exclusively a resident of another country by virtue of a double taxation treaty.

Individuals are subject to income tax at a marginal rate of tax between 18% and 45%, which is based on a progressive tax table that increases as taxable income increases. It is withheld by the employer in terms of the "pay-as-you-earn" (PAYE) principle. Employers must deduct tax from an employee's salary and, in addition, have reporting duties to the South African Revenue Service (SARS). Employers must make contributions to statutory training programmes.

South Africa has a limited social security system (old age pension and social grants under certain circumstances). However, it can be provided for contractually as between the employer and employee, as in the case of:

  • Private pension funds. These are regulated by statute, operated by employers and administered by various methods (often by insurance companies). Contributions are generally made by the employee, usually 5% to 7.5% each of the employee's salary.
  • Medical aid schemes. South Africa does not have a national medical insurance system. Private medical aid programmes, operated under the Medical Schemes Act, 1998, cover most medical expenses. The employee and the employer usually contribute equally, although there are certain tax advantages where a scheme is non-contributory from the employee's perspective.
  • Unemployment insurance. Employees contribute 1% of the employee's earnings to the Unemployment Insurance Fund, which provides benefits for people out of work and for the dependants of deceased contributors.

Non-tax resident employees

Income Tax Act is based on the general principle that tax is levied only on income derived from a source within or deemed to be within the Republic for non-tax resident employees.

This general rule applies to both companies and persons other than companies. With the exception of non-resident companies, non-residents (including employees) are taxed at the rates which apply to residents and they are entitled to the deductions and rebates which apply to residents.

Headline Corporate Income Tax Rate (excluding dividend taxes)

  •  28%

Taxes on corporate income

In South Africa, the CIT rate applicable for corporate income of both resident and non-resident companies is a flat 28%. It was announced in the February 2021 National Budget that this rate would be reduced to 27% with effect for tax years commencing on or after 1 April 2022.

Small business corporations (i.e. companies with only natural persons as members/owners and with gross income of not more than 20 million South African rand [ZAR]) are taxed at the following rates:

  • 0% on the first ZAR 87,300 of taxable income.
  • 7% on taxable income above ZAR 87,300 but not exceeding ZAR 365,000.
  •  21% on taxable income above ZAR 365,000 but not exceeding ZAR 550,000.
  •  28% on taxable income exceeding ZAR 550,000.

Tax Resident Business

South African tax residents are taxed on their worldwide income and capital gains.
Non-residents generally are taxed on income earned from a source within South Africa and subject to the application of an applicable double taxation agreement, they do not need to have a permanent establishment (PE) in South Africa for a tax liability to arise. A PE will account for South African sourced income, irrespective of the number of employees employed by a PE in South Africa.

Tax Resident

A company is regarded as a South African tax resident if it is incorporated in South Africa or if it has its place of effective management in South Africa. The place of effective management refers to the place where key high-level strategic and commercial decisions that are necessary for the conduct of a company's business as a whole are in substance made. The facts and circumstances of the particular company must be considered in determining if such company has its place of effective management in South Africa.

Non-tax Resident Business

Non-residents for South African tax purposes are only taxed on income from a source in South Africa. Non-residents are only subject to capital gains tax on immovable property situated in South Africa or an interest in or to immovable property situated in South Africa.

South Africa is currently party to approximately 80 double tax treaties, including those with the US and the UK, and is currently in the process of re-negotiating and ratifying a number of other treaties.

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