What You Need to Know About BEE Exempt Certificates in SA
BEE Exempt certificates provide the holders with exemption from the requirements of the B-BBEE Codes of Good Practice. As such, any companies that qualify for BEE exempt certificates are advised to get their certificates, as to ensure they can favourably compete with larger firms with high BEE Scores.
In order to compete for government tenders, companies must have valid BEE certificates. The BEE exempt certificates serve as proof that qualifying companies have Level 4 contributor status, and as such, can compete for the relevant tenders.
B-BBEE and Exemption
The Black Economic Empowerment Codes of Good Practice states in paragraph 4 that any enterprise with a total annual turnover of R10 million or less is considered an Exempt Micro-Enterprise. The Level 4 contributor status is thus attributed to such an enterprise. Though BEE exempt certificates are not compulsory, they are certainly recommended as proof of Level 4 contributor status. The certificates also serve as proof of 100% B-BBEE procurement recognition.
If the Exempt Micro Enterprise is 51% to 99% black owned, the exempt certificate indicates Level 2 contributor status and 125% procurement recognition. If the enterprise is 100% black owned, then the status becomes Level 1 contributor and 135% procurement recognition applies.
What is Needed for Exemption?
The enterprise needs to submit an auditor certificate, or one issued by a verification agency or accounting officer to obtain the BEE EME exempt certificate.
Alternative to BEE Exempt Certificates
You can complete an affidavit, which must be signed by a Commissioner of Oaths to serve as the certificate. However, having a certificate issued by an independent party, such as an accounting firm or verification agent, does provide more credibility.
How to Know if Your Company Qualifies
If your firm has an annual turnover of R10 million or less, then it qualifies for the BEE EME exempt certificate. We can assist you in determining which level of contributor status applies according to ownership and shareholding. Note that specific requirements relate to the tourism and construction sectors. The threshold in the construction sector is R1.5 million for Built Environment Professionals. This applies to enterprises related to consulting engineers, quantity surveyors, and architects. The threshold for turnover in the tourism sector is R2.5 million per year.
What to Do Next?
Give your company the ability to compete favourably for government tenders. Call us for more information about the issuing of BEE exempt certificates.
Note: this article is for informational purposes only and does not constitute legal, financial, or tax advice. Contact us for tax or financial advice rather than relying on the information in this article. Information is relevant to the date of publishing.