Industrialization Case

South Africa's efforts to make it easier for businesses to start up and pay tax have lifted its ranking

from 35 to 32 on the 2008 World Bank's Doing Business Index.

South Africa's improvement in the rankings was due largely to the amendments to the Companies Act that were implemented during the course of 2007, making it easier to register a new business.

The Index tracks how business-friendly the regulatory environment is, especially for small and medium-sized businesses. It is based on ten indicators covering the time and cost of starting and operating a business, trading across borders, paying taxes and closing a business. The removal of the regional services council (RSC) levies and the reduction in the rate of secondary tax on companies also contributed to the improved rating. In the same World Bank Index, South Africa is ranked second in the world on ease of getting credit. It also ranks well on protecting investors and paying taxes, but scored low for ease of employing workers and trading across borders.

Furthermore, the World Bank and PricewaterhouseCoopers in November 2008 gave South Africa a high rating of 23 (up from 61 in 2007) out of 181 economies in terms of ease of paying taxes.

The Companies Act of 1973, which is administered by the Registrar of Companies, regulates the formation, conduct of affairs and liquidation of all companies. The Act makes no distinction between locally-owned and foreign-owned companies. Companies may be either private or public. Foreign companies establishing subsidiaries in South Africa must register the subsidiary in accordance with the Act.