Exporting or importing in South Africa: comparing 3 options for international entities or individuals

Are you a foreign entity wanting to manage exports from or receive imports in South Africa? Do you want to know how you can manage the South African section of your import/export journey independently? This is not uncommon. Typical scenarios include the foreign buyer who purchases from various South African suppliers and would then like to group and consolidate the products independently before export; the international entity busy with a short-term business venture and importing products for this purpose; the international entity who would prefer to handle their import distribution in South Africa themselves; the individual who needs to transfer valuable personal goods in or out of South Africa.

There are 3 options for international entities or individuals to choose from when it comes to exporting from or importing into South Africa independently. These are discussed below:

1. Obtain the services of an importer or exporter of record

The importer or exporter of record is an importer or exporter who is registered locally in South Africa and handles the necessary transactions on your behalf. They are responsible for adhering to the regulatory requirements, for clearing your products through South African Customs and for settling all taxes, duties or VAT (Value Added Tax). The South African government considers the importer or exporter of record to be the owner of the products during transit.

Regulatory requirements: Nil

Positives: Quick, as delays from needing to become import/export compliant are avoided.

Negatives: Invoices must show the name of the importer or exporter of record for customs clearing purposes. There are fees, as the importer or exporter of record generally asks for a percentage of all the taxes or the transaction value.

2. Register your international entity as an exporter or importer in South Africa

An international entity or individual can register with South African customs as an exporter or importer. Doing so allows the entity to manage all its own export and import transactions and any related tax payments.

A customs registered agent who is South African must represent the foreign entity or individual at South African customs. Responsibility for transactional compliance rests with the international entity. However, if South African Customs or SARS (South African Revenue Service) is unable to regain any outstanding fees from the international entity, the South African Customs registered agent is financially liable for cases of non-compliance for a period of 5 years following each transaction.

Regulatory requirements: The international entity/ person must be registered at South African customs. They must keep correct contact and location details there. They must have a customs registered agent who is South African and legally contracted to represent them at customs.

Positives: The international entity can manage its own export and import transactions. However, the ad hoc help of their customs registered agent can also be sought. SARS has no statutory requirements besides ensuring that South African customs have correct information and payments for every export and import transaction.

Negatives: The South African customs registered agent carries significant financial risk for 5 years following each transaction. To ensure compliance, registered agents therefore tend to demand that they supervise every transaction, and will require payment for this service.

3. Create a South African Company

In this final scenario, the South African company can be registered for export and import and it can handle any business with South Africa. It would be responsible for ensuring the compliance of every international transaction, along with fulfilling South African accounting requirements annually The South African company could be joined to an international entity either through that entity owning shares (i.e. a subsidiary company scenario), or where the South African company is a branch of the foreign company registered in South Africa. Here are more details on opening a South African subsidiary or branch company.

Regulatory requirements: Customs compliance for each export/import transaction, as well as annual SARS and CIPC (Companies and Intellectual Property Commission) requirements. At a minimum, SARS requires the filing of two provisional tax returns and one income tax return annually. At a minimum, CIPC requires a South African representative registered at CIPC and filing one return annually.

Positives: Independent management of export and import transactions. A South African company can register for VAT, open a South African bank account, and employ local staff if it wishes.

Negatives: The company must meet annual CIPC and SARS regulatory requirements. It must pay income tax on South Africa on profits. Dividend tax may apply to a subsidiary company.  The company must keep at least one office or registered address in South Africa.