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The amended B-BBEE Construction Codes have been gazetted with immediate effect

The amended B-BBEE Construction Codes have been gazetted with immediate effect

Companies must ensure that they adhere to all the requirements when making contributions toward Socio-Economic Development (SED) to obtain the maximum points available.

You need to determine what type of entity your business will be classified as.

The thresholds for Qualifying Small Enterprises (QSEs) are:

  • For Contractors – a total annual revenue of between R10 million and R50 million per annum.
  • For Built Environment Professional (BEPs) – with a total annual revenue between R6 million and R25 million per annum.

The thresholds for Generic Enterprises are:

  • For Contractors – a total annual revenue of more than R50 million per annum.
  • For BEPs – a total annual revenue of more than R25 million per annum.

What is the Target for SED Contributions?

For QSEs the target for SED is 1% of Net Profit after tax to obtain 3 points. To claim an additional 2 points, 50% of the contribution should be made towards a ‘Community with Limited Services’.

For Generic Enterprises, the target for SED is 1.25% of NPAT to obtain 4 points. To claim an additional 1 point, 30% of the contribution should be made towards a Community with Limited Services. There is 1 bonus point available if the contribution is towards Structured SED Projects.

STATS SA defines a “Community with Limited Services” as:

(a)       Less than 65% of the households have access to piped water, or

(b)       Less than 85% of the households have access to electricity.

(c)       In addition to (a) or (b), more than 50% of the households have an average household income in the first 5 levels (including none) of the income data table.

The full value of SED Contributions made to beneficiaries is recognisable if at least 75% of the value directly benefits black people as defined by the Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice. If any portion of the contribution benefits black people with disabilities, this will be enhanced by 1.25 when calculating the points.

When calculating the target of the NPAT, the preceding 3 financial statements (Turnover and Profit/Loss) and the indicative profit margin for the specific industry are taken into consideration. You will need to contact your legal advisor with in-depth knowledge to assist you with these calculations.

The changes to the SED element must be considered, and all contributions should be made within your company’s financial period.

ABOUT THE AUTHOR

Tashta Dayaram is an admitted attorney who obtained her LLB degree from the University of KwaZulu-Natal. She joined SEESA BEE as a legal advisor in July 2015 at our Durban office.

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