Construction—South Africa—Q&A guide

The following Construction practice note provides comprehensive and up to date legal information covering:

  • Construction—South Africa—Q&A guide
  • 1. If a foreign designer or contractor wanted to set up an operation to pursue the local market, what are the key concerns they should consider before taking such a step?
  • 2. Must foreign designers and contractors be licensed locally to work and, if so, what are the consequences of working without a licence?
  • 3. Do local laws provide any advantage to domestic contractors in competition with foreign contractors?
  • 4. What legal protections exist to ensure fair and open competition to secure contracts with public entities, and to prevent bid rigging or other anticompetitive behaviour?
  • 5. If a contractor has illegally obtained the award of a contract, for example by bribery, will the contract be enforceable? Are bribe-givers and bribe-takers prosecuted and, if so, what are the penalties they face? Are facilitation payments allowable under local law?
  • 6. Under local law, must employees of the project team members report suspicion or knowledge of bribery of government employees and, if so, what are the penalties for failure to report?
  • 7. Is the making of political contributions part of doing business? If so, are there laws that restrict the ability of contractors or design professionals to work for public agencies because of their financial support for political candidates or parties?
  • 8. Is a construction manager or other construction professional acting as a public entity’s representative or agent on a project (and its employees) subject to the same anti-corruption and compliance rules as government employees?
  • 9. Are there any other important legal issues that may present obstacles to a foreign contractor attempting to do business in your jurisdiction?
  • More...

Construction—South Africa—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to construction in South Africa published as part of the Lexology Getting the Deal Through series by Law Business Research (published: April 2021).

Authors: Tiefenthaler Attorneys Inc—Martin van der Schyf

1. If a foreign designer or contractor wanted to set up an operation to pursue the local market, what are the key concerns they should consider before taking such a step?

A foreign designer or contractor would need to consider, among other things:

  1. the type of legal entity or business vehicle it wished to establish and the formalities related to its registration;

  2. the sector codes for the construction and the finance services sector gazetted by the Department of Trade and Industry on 1 December 2017 relating to broad-based black economic empowerment; particularly, those relating to ownership, skill development and enterprise and supplier development;

  3. South Africa's ongoing electricity struggles (ie, load-shedding and obtaining electricity at future sites not already connected to the South African power grid);

  4. compliance with the requirements of the Compensation for Occupational Injuries and Diseases Act No. 130 of 1993;

  5. compliance with and the acquisition of the relevant International Organization for Standardization accreditations; and

  6. the relevant overtime exemptions as set and determined by the Department of Labour.

 

A foreign contractor should also take into consideration any tax implications, including corporate tax, provisional tax, pay as you earn tax, the Unemployment

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