The result of the 2016 referendum in the United Kingdom has made many companies there worry that they may not be able to continue normal trade within the European Union. Europa Trust Company Ltd reports that UK companies who wish to access the European market could still do so by setting up in South Africa.
On 23 June 2016, the people of the United Kingdom (UK) voted in a referendum on whether or not to leave the European Union (EU) bloc of 28 member states. Both campaigns for staying IN and OUT of the EU argued about the UK’s ability to continue trade within the single market. The result of the referendum was for the UK to leave the EU. It is currently planning on leaving the EU on 31 October 2019, potentially without a deal.
For many UK businesses the prospect of not being able to trade normally with the EU is extremely worrying. The prospect of a “No Deal BREXIT” adds further uncertainty towards their business continuity. However, South Africa has been monitoring the situation of the referendum closely and may offer a clear solution.
The UK is a significant trading partner of South Africa, importing almost a billion pounds from the UK during 2018. South African former Minister of Trade and Industry, Dr. Rob Davies has stated at a news conference that “If the UK needed to export their products to the EU and if it had no arrangement with the EU, then British companies could come to South Africa and they could establish themselves here,” Effectively allowing UK companies to continue to trade within the European single market.
South Africa has been part of The Trade Development and Cooperation Agreement (TDCA) since 2000 which allows it access to the EU with other southern African countries. South Africa has also signed an Economic Partnership Agreement (EPA) on its own with the EU. In 2018, South Africa exported over £4,3 Billion to the EU.
The former Minister Dr. Davies explained further that UK companies, “could use South Africa as a base to access the EU market, because the TDCA and now the EPA provide for that possibility.”
Should the UK leave the EU without a deal, UK companies could look to South Africa to help them continue to trade in Europe with potentially no problem with “no deal”.
There are many advantages of establishing a company in South Africa.
• It has modern company laws.
• South Africa’s VAT is 14%, which is lower than the UK and other European counties.
• Directors and shareholders of a South African company do not have to be South African citizens or residents.
• South Africa has an established stock exchange and is one of the world’s top 20 largest exchanges.
For more information and advantages of South Africa as a jurisdiction click here.
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