Best way for a foreigner to open a business in South Africa

As a businesses person you are used to being presented all the options and associated facts on which to base your decisions. It’s not always the most obvious solution that is the best solution. Below we deal with the best way for a foreigner to open a business in South Africa.

Is there more than one choice?

Yes there is. All too often foreigners opening up a business in South Africa are presented with just one choice – the business visa. There is nothing wrong
with the business visa and it will suit a great many applicants, but not all.

Whats the other choice?

One of the best ways for a foreigner to open a business in South Africa is the Independent Financial permit.

It cuts through much of the red tape and bureaucracy associated with a business visa application as well as negating the need for the ongoing reporting that the DHA requires from a business visa or permit holder.

It also eliminates risk

When you make an application for a business visa it is associated to one particular business. Either a new one or existing one. The flexibility to look at other businesses to run is therefore taken away, and should your business fail your residency status in South Africa is also now at risk.

The independent financial persons permit allows as few or as many businesses as the holder requires. It also allows the holder to take up employment, or simply take their time to explore opportunities, waiting for the right one.

Then surely an independent financial permit is the best way for a foreigner to open a business in South Africa

It has its drawbacks, such a processing times and a much larger Department of Home Affairs fee. It also requires the individual so have a greater net wealth (though this does not need to be invested in a business nor even brought into South Africa).

Its essential to get advice as to which is the right route for you. The best way to open a business as a foreigner in South Africa can only be decided when a proper consultation has taken place.

The below table gives you the facts for the best way for a foreigner to open a business in South Africa.

Criteria	Business Visa	Independent Financial Permit
Minimum investment	ZAR 5 million	None
Required net wealth applicant	Nil but needs to invest ZAR 5 million into business	ZAR 12 million
Number of businesses can set up	1	As per holders choice no minimum or maximum
Employee obligations	60% South Africans	No obligations
Business plans	Must be submitted with application	Not required
Business structure	Must be submitted with application	Not required
Ongoing requirements	Proof submitted to Department at various intervals	Not required
Temporary residency	Yes via a business visa	Not an adoption under the permit
Permanent residency	Can be applied for on receipt of a business visa	Application is for permanent residency
Repercussions of business failure	Could result in visa or permit being at risk as we’ll as status in South Africa	None other than holders own financial loss
Processing times	For temporary residency up to 6 months DHA permitting. For permanent currently approx 12 to 24 months.	Approx 9 months
Fees	Normal DHA fee	Additional ZAR 120,000 success fee payable to DHA