External Company (Branch) (Branch)
External Company
Création d'entreprise en South Africa
The Branch is best suited for: Foreign companies testing the South African market before full subsidiary formation, Multinational corporations needing a local operational presence, Companies providing services under a contract that requires a South African registered entity. An external company (branch) is taxed at the same 27% corporate income tax rate, but only on income sourced within South Africa. Profits remitted to the head office are not subject to dividends tax (as they are not dividends), but the branch may be subject to a withholding on management fees or royalties paid to the parent. Treaty relief is often available. VAT obligations mirror those of domestic companies.
- Foreign companies testing the South African market before full subsidiary formation
- Multinational corporations needing a local operational presence
- Companies providing services under a contract that requires a South African registered entity
Faits essentiels
Processus de constitution étape par étape
Register as an external company with CIPC
File the CoR20.1 form along with the foreign parent's constitutional documents, a resolution authorising the establishment of the branch, and details of the local representative.
Appoint a local representative
Designate a person resident in South Africa who is authorised to accept service of process and act on behalf of the external company.
Register with SARS
Register the branch for corporate income tax and, if applicable, VAT. The branch is taxed only on South African-source income.
Open a corporate bank account
Provide the CIPC registration certificate, parent company documents, and local representative details to a South African bank.
Documents requis
- Certified copies of the foreign parent company's constitutional documents
- Resolution from the parent company's board authorising the branch
- Completed CoR20.1 form
- Passport and ID details of the local representative
- Proof of local registered address
- Apostilled or authenticated copies of parent company registration documents
Aperçu des coûts
Traitement fiscal
An external company (branch) is taxed at the same 27% corporate income tax rate, but only on income sourced within South Africa. Profits remitted to the head office are not subject to dividends tax (as they are not dividends), but the branch may be subject to a withholding on management fees or royalties paid to the parent. Treaty relief is often available. VAT obligations mirror those of domestic companies.
Avantages et inconvénients
- No separate share capital requirement
- Simpler structure for a market entry or contract-based presence
- Profits can be repatriated to the parent (subject to exchange control approval)
- May benefit from tax treaty provisions between South Africa and the parent's home country
- Parent company bears unlimited liability for the branch's obligations
- Subject to South African tax on local-source income
- Exchange control regulations apply to cross-border payments
- Less flexibility in structuring compared to a standalone Pty Ltd
- Annual filing requirements include both local and parent company financials
Autres structures en South Africa
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CommencerThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.