It is very important for a business to be aware of which Broad-Based Black Economic Empowerment (B-BBEE) Codes are applicable to their specific business.
The following amended Sector Codes have been gazetted by the Department of Trade and Industry to date:
- Agriculture
- Construction
- ICT (Information Communication and Technology)
- Finance
- MAC (Marketing Advertising and Communication)
- Property
- Tourism
The draft amended Transport Sector Code have been gazetted but not yet finalised. This means that the old Transport Sector Code is still applicable.
The scope of Application for Sector Codes
Each of the abovementioned Sector Codes includes a specific scope of application that determines when an entity will be classified under the specific sector. Should an entity fall within a specific scope of application it means that that entity needs to be rated on the sector scorecard applicable to them. All of the above-listed sector codes have their own Generic and Qualifying Small Enterprise (QSE) Scorecards that they must be rated on.
Should your business fall under more than one scope of application you will you have to determine what part of the business generates the biggest part of the income. In other words, what part generates more than 50% of your turnover. Once this has been determined and confirmed, that specific sector code will then be applied to your business.
Business type and brackets for QSEs, EMEs, and Generic Entities
It is also important to take into consideration that the different Sector Codes have different brackets to determine whether an entity will be classified as an Exempted Micro Enterprise (EME), QSE or a Generic Entity. For example, if an entity falls under the Tourism scope of application the turnover brackets applicable to them are as follows:
- EME – Turnover below R5 million
- QSE – Turnover between R5 – R45 million
- Generic Entity – Turnover more than R45 million
As you can see, this is different from the Codes of Good Practice, where the turnover brackets applicable are:
- EME – Turnover below R10 million
- QSE – Turnover between R10 – R50 million
- Generic Entity – Turnover of more than R50 million
Ensuring you are rated on the correct scorecard is crucial to your business and South African business owners should ensure they apply the correct Sector Code when planning their BEE strategy.