For any expat wanting to operate a business in SA, they cannot fully operate their business without having the correct visa, that is, a business visa. Without a business visa, there is high risk for you as an expat as:
- You cannot independently run the business or invest in an existing business in SA
- You risk losing investments and/or profits already made
- The business cannot comply with statutory regulations which negatively impact the business, with the potential for extremely expensive fines
- You may need to resort to the use of “fronts” to get operations going/keep them going, at the risk of being bought out and losing their investments
Now, to obtain a business visa would bring with it enormous benefits, such as:
- A three-year visa giving one a breather from visa renewals for at least three years
- Qualification for permanent residency immediately without having to wait for the entire three year tenure of the business visa
- Permanent residency means – long-term indefinite stay in SA, with all the rights and duties of an SA citizen, access to the benefits that would aid the growth of the business
- Security on your investment with an indefinite stay in SA
- Opportunities to grow and expand the business within and outside SA
WHAT IS THE CAPITAL INVESTMENT REQUIREMENT?
To get the business visa, one needs to meet the minimum qualifying criteria, one of which is the R5 million capital requirement. This investment should originate from outside South Africa and be invested in a business that is still to be established or is an already existing business in South Africa. The capital requirement may be reduced or waived for specific industries/sectors or under other circumstances, with substantial motivation. Many often wonder how to meet this requirement or how to prove it.
WHAT CONSTITUTES A CAPITAL INVESTMENT?
The capital investment can be in the form of cash (actual money) that the business owner(s) of the said business has invested into the business. Businesses can also receive capital investment in the form of non-cash assets of the business such as machinery and equipment.
The cash and/or the non-cash assets should be brought from another country directly into South Africa. The total value of the cash and/or non-cash assets should amount to a minimum of R 5 000 000.00 to qualify for a full compliance business visa application.
Some practical examples include the following:
- Buying motor vehicle(s) in Germany which will be utilized by the business in South Africa
- Buying a printing machine in China which will be utilized by the business in South Africa
- Buying office furniture in Italy which will be utilized by the business in South Africa
- Physically transferring money from the foreign bank account (personal or business) into the business bank account in South Africa.
Please note that the capital investments are not limited to the above list. The list is purely an example of what could be considered as capital investment.
DOCUMENTATION TO PROVE CAPITAL INVESTMENTS
In the examples cited above, one can prove such investment through:
- Proof of purchase of the machinery/equipment (receipts, purchase order, sale agreements)
- Proof of ownership of the vehicles and registration documents (vehicle registration documents)
- Proof of bank account for both foreign and local bank together with proof of the transaction, that is, bank statements/confirmations showing the amounts transferred to the SA bank account, any foreign exchange compliance procedures, etc.
Where the business is already operational, usually the asset register would cover the list of assets invested into the business and this needs to show date of purchase, description of the machinery and/or equipment, purchase price (indicating currency used at point of purchase and converting it to ZAR where required, using the relevant exchange rate) and the unique identification number.
The Chartered Accountant would be able to assist with the asset register as part of their preparation of the financials, as these will also be required for a business that is already operational.
The capital investment amount of R 5 000 000.00 should be confirmed in the Factual Findings Report which is done by a Chartered Accountant who is registered with the South African Institute of Chartered Accountants (“SAICA”) Or Professional Accountant registered with the South African Institute of Professional Accountants (“SAIPA”).
WHAT IS THE PURPOSE OF THE CAPITAL INVESTMENT?
The main purpose of the business visa is to attract inward investment into the country and boost the economy. There are industries where this inward investment and growth is crucial, and these are identified as key industries. The Department of Trade and Industry together with the Department of Home Affairs need to see an actual investment into the South African economy and that the capital investment, whether cash or machinery /equipment, is revolving in the business.
If you would like advice regarding the R 5 000 000.00 capital requirement, what is required, how you can prove this or perhaps have it waived through a waiver application, please follow the link below and complete your details and one of our Consultants will contact you.
