27 INTERNATIONAL TECH HUBS SECOND EDITION | BDO LLP
GENEROUS R&D ALLOWANCES FROM THE GOVERNMENT, WHICH HELP LOOKING TO INNOVATE. TO INCENTIVISE COMPANIES
THE GOVERNMENT SUPPORT From an ease of doing business perspective, South Africa is very welcoming. Buying and gaining access to corporate structures is very simple, making it appealing to those looking to start up or scale up. However, South Africa does have stringent exchange control regulations. Though it is easy to get money into the country, it is harder to get it back out. This means investors and entrepreneurs need to consider their corporate structures and transactions carefully in order to ensure their investments are cost-effective and sensible for their needs. Corporate tax rates are also relatively high at 28%, but the international profile of South Africa and access to other markets means that this price of entry is bearable. This is also mitigated by generous R&D allowances from the government, which help to incentivise companies looking to innovate. THE INVESTOR ANGLE South Africa’s own venture capital market has yet to develop fully when compared to others on an international scale, but the high level of appeal from international investors mitigates this for companies in the region. The US and China have high levels of interest in investing money into the South African market, with Huawai and Microsoft seeing the appeal of a country with solid infrastructure and the ideal location to launch into the wider continent. The smaller stature of the local market also offers opportunities for businesses looking to raise their profile. The Johannesburg Stock Exchange, for example, has only 25 businesses listed in the tech sector.
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