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Regulatory Environment

Taxation
The South African tax system has changed from a source-based to a residence-based system with effect from the 1 January 2001, in keeping with international trends. This means that South African residents will be taxed on their world-wide income. Non-South African residents will still be taxed on income from South African sources, subject to the double taxation agreements with the different countries. The principle taxes imposed in South Africa are direct and indirect taxes, as follows:

• Direct Taxes include income tax, secondary tax on companies (STC), capital gains tax (CGT) and donations tax.
• Indirect Taxes include value-added tax (VAT), estate, stamp and transfer duties, the latter on real estate, customs & excise duties, marketable security taxes, skills development levies, municipal taxes on owners of real estate, airport taxes and fuel levies.

For more information on taxation, please visit www.sars.gov.za.

Competition and Regulatory Policy
South African authorities embarked on a major overhaul of competition policy, which led to the formulation of a new policy, the Competition Act, No. 89 of 1998, which seeks to achieve the following objectives:

• To promote the efficiency, adaptability and development of the economy;
• To provide consumers with competitive prices and product choices;
• To promote employment and advance the social and economic welfare of South Africans;
• To expand opportunities for South African participation in world markets and recognise the role of foreign competition in the Republic;
• To ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy; and
• To promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons (HDIs).

In meeting these objectives, it is focused on restricting anti-competitive practices, eliminating abuse of dominant positions and strengthening merger control.

Three institutions are created in terms of the Act to achieve the above objectives:

• The Competition Commission, which is independent but whose decisions may be appealed to the Competition Tribunal and the Competition Appeal Court;
• The Competition Tribunal, which has jurisdiction throughout South Africa and is independent from the competition institutions; and
• The Competition Appeal Court, which has status similar to that of a High Court and jurisdiction throughout South Africa.

For more information on the Competition Commission, please visit: www.compcom.co.za

For more information on the Competition Tribunal, please visit: www.comptrib.co.za

For more information on the Competition Appeal Court, please visit: www.compcom.co.za/aboutus/aboutus_competition_appeal_court.asp

Industrial Development Zones
The Industrial Development Zone (IDZ) programme is one of many incentives offered by the dti to encourage international competitiveness of the South African-based manufacturing sector.

IDZs are purpose-built industrial estates linked to an international port or airport, in which quality infrastructure and expedited customs procedures are coupled with unique duty-free operating environments suited to export-oriented production.

The IDZ will provide, inter-alia, the following benefits to IDZ / CCA enterprises:

• A Customs Controlled Area (CCA) with dedicated South African Revenue Service (SARS) customs officials to provide support with customs and excise requirements;
• Duty-free on imports of production-related raw materials, including machinery and assets to be used in production - with the aim of exporting the finished products;
• Zero-rating on value-added tax (VAT) for supplies procured in South Africa;
• Accessibility to most government incentives that will contribute to lowering the cost of production;
• A one-stop shop centre for all the necessary regulatory and documentation preparations required by an investor; and
• World-class infrastructure that offers international best practice environment.

Government will license operators to develop and run the IDZs, provide enterprise support measures, minimise red tape and provide efficient services to enterprises within an IDZ. There are currently four IDZ in the country i.e.:

Intellectual Property Rights
South Africa has a developed system of intellectual property law covering patents, industrial designs, copyright and trademarks. It is also a signatory to most of the international conventions in this field.

For more information on these topics, please visit: www.cipro.co.za.

Other Regulations
Environmental Regulations
In terms of Section 24 of the Constitution and the National Environmental Management Act (NEMA), the Department of Trade and Industry (the dti) is to take care that a sound balance is maintained between environmental and socio-economic aspects in all policies, plans, programmes and decisions, including the encouragement of investment, granting of incentives and all other interventions.

the dti encourages existing industries to implement Cleaner Production (CP) as an internationally adopted tool that incurs savings, increases competitiveness and elevates companies to higher levels of resource and energy efficiency.

the dti at the 2002 World Summit on Sustainable Development established the National Cleaner Production Centre (NCPC), which implements CP in priority sectors, focusing on textiles, agro-processing and chemicals. NCPC sector projects are conducted in terms of Trade and Investment South Africa (TISA) Customised Sector Programmes (CSP).

Labour Regulations
Details on labour regulations can be accessed at the following web address: www.labour.gov.za.

Exchange Controls
For Exchange Control regulations; please visit the Reserve Bank's website: www.resbank.co.za.

Financial Regulations
For more information on Financial Regulations, please visit: www.fsb.co.za.