The truth about B-BBEE and how it affects your business
Broad-Based Black Empowerment (B-BBEE) is a term in the business world abhorred and detested by those it targets. Recent changes to the B-BBEE Codes have led to many misinterpretations and gave way to rumours and myths about what it is and how it is implemented.
There are many misconceptions about B-BBEE in the marketplace and how it affects your business.
Let’s do some myth-busting:
I need to give away or sell ownership of my Business to Black People:
The answer is NO!
90% of businesses do not need to have Black Ownership to be B-BBEE Compliant.
I do not do business with the State, so I do not need a B-BBEE Certificate:
Wrong!
By LAW all companies need to have a B-BBEE Certificate or Affidavit if they fall below the various thresholds.
There is nothing the government can do if my business does not have a B-BBEE Scorecard:
Wrong!
The law states that, if the DTI enters any business, and they do not have a B-BBEE Scorecard or Affidavit to EXEMPT them, the DTI may fine the company up to 10% of TURNOVER as well as IMPRISONMENT to the owners or directors of the company for up to two years.
My Company turnover is below the Threshold:
With the New Codes that came into effect in May 2015, the Thresholds have changed. Companies with an annual turnover of less than R10-million is exempt (General Codes).
Unfortunately, it is not true for all companies.
Companies in the following Sectors have thresholds that start from R 1. 5 million to R 5 million Turnover per year and need a Compliant B-BBEE Scorecard:
- Construction Sector
- Tourism Sector (including Restaurants)
- Transport Sector
- Forestry Sector
- Agri Sector
- ICT Sector (Telecommunication)
- Financial Sector
- Chartered Accountancy
- Property Sector
B-BBEE will be discontinued and fall away:
WRONG!
B-BBEE will not fall away!
The government is fully committed to transformation and said that Companies need to Comply!
It is only going to get more abstruse and demanding.
The company that does our B-BBEE Audit will help us when we need to do our B-BBEE Audit:
WRONG!
The law states that no verification company — companies that issue B-BBEE Certificates — may give B-BBEE advice to enhance their client’s B-BBEE Score. They may only Verify!
It is the same as when you go to SARS … they may not by law give you TAX advice, that is why you need to consult a Tax Consultant!
| B-BBEE LEVELS AND THRESHOLDS | |||
| LEVEL | OLD CODES | AMENDED CODES | B-BBEE recognition level |
|
1 |
100 points | 100 points |
135% |
|
2 |
85 – 99.9 points | 95 – 99.9 points |
125% |
|
3 |
75 – 84.9 points | 90 – 94.9 points |
110% |
|
4 |
65 – 74.9 points | 80 – 89.9 points |
100% |
|
5 |
55 – 64.9 points | 75 – 79.9 points |
80% |
|
6 |
45 – 54.9 points | 70 – 74.9 points |
60% |
|
7 |
40 – 44.9 points | 55 – 69.9 points |
50% |
|
8 |
30 – 39.9 points | 40 – 54.9 points |
10% |
| Non-Compliant | 0 – 29.9 points | 0 – 39.9 points |
0% |
| Please note that the above mentioned Levels and Thresholds are applicable to all the Codes and Sector Charter Codes. | |||