In South Africa, having a BEE certificate is essential if you are a business owner. No matter for start-up companies or large firms which are aiming to set up new offices, getting a BEE certificate is compulsory before you conduct any business in South Africa. This article is going to discuss the BEE certificate and its application process.
What is a BEE certificate
BEE are initials for Black Economic Empowerment. A BEE certificate is an authorized testimonial to show that you have black ownership in your company and are compliant with the BEE regulations. This is a strategy introduced by the government to ensure that there is a fair business opportunity for all people, especially for the disadvantaged black people – Indian, African, colored individuals, who had experienced inequalities in previous times.
Companies with a BEE certificate are assigned a B-BBEE (Broad-based black economic empowerment) level based on a scorecard system that assigns points for various activities. There are 105 points in total and points are distributed as follows:
• Enterprise development and supplier development – 40 points
• Ownership – 25 points
• Skill development – 20 points
• Management control – 15 points
• Socio-economic development – 5 points
The B-BBEE level is important because it decides the procurement opportunities available to your business. The higher points you have, the more benefits you gain. If your total score is less than 30, then you will be considered a business not compliant with the BEE regulations.
Where to use BEE certificate
The BEE certificate is important for every company to have. It makes your business much easier in South Africa for the following reasons:
1. B-BBEE score points are incentivized by the government if you buy from a BEE-compliant supplier.
2. To do business with the government, your company has to reach a certain level of B-BBEE. The government will not transact with non-compliant companies.
3. BEE-compliant companies benefit from tax deductions and incentives for the Skill Development Levy.
4. A BEE certificate allows you to have access to business licenses. In some industries, you need to have licenses before you start operating. For instance, the mining industry requires all relevant licensed ready beforehand. Without a BEE certificate, you have no right to obtain any related license for mining.
How to get a BEE certificate in South Africa
The BEE certificate can only be valid when it is issued by either a SANAS (South African National Accreditation System) or IRBA (Independent Regulatory Body for Auditor) accredited verification agency. These certified agencies are where you can inquire and go through your BEE certificate application.
Here is how to find yourself an agency:
1. Visit the homepage of SANAS
2. Navigate to the top row, find “Accreditation” and tap “Conformity Assessment Bodies (CAB)”. Then you will find a list of CABs as below. Click “Verification Agency (B-BBEE)” on the bottom row.
3. Here you are with a long list of verification agencies for BEE certificate. Feel free to search for the nearest one and you can find all the details of an agency by clicking its accreditation number in red. Once you find a suitable agency, you can visit it and start your application process.
How to get a CIPC BEE certificate
BEE classifies companies into several categories by their annual turnover. See the category definition below:
• Start-up Enterprises: If your company is recently formed and it has been operated for less than 1 year, it falls into this category.
• Exempted Micro Enterprises (EMEs): If your annual turnover is less than R10 million, it would be an EME.
• Qualifying Small Enterprises (QSEs): For companies whose annual turnover ranges from R10 million to R50 million, they are referred to as QSEs.
• Large Enterprises: If your company’s annual turnover exceeds R50 million, it would be categorized as a large enterprise.
Startups and EMEs don’t have to get B-BBEE certificates. Companies under both categories can submit an Affidavit and have it signed by an Oath Commissioner instead. On the other hand, companies with an annual turnover of more than R10 million can apply for a CIPC BEE certificate online. CIPC refers to the Companies and Intellectual Properties Commission. It governs all registered entities in South Africa.
Here are the steps on how to apply for BEE certificate on CIPC:
1. Visit eservices.cipc.co.za and click on “customer registration”. After you have set up your account, log in with your customer code and password.
2. After log in, click “transact” on the top right and you will find a table of squares. Tap “B-BBEE certificates” on the last row, then tap “New B-BBEE Application”.
3. Select your company on the list to apply for the B-BBEE certificate.
4. Continue to follow the instructions and provide the information required, including the relative name of the director, ID details, shareholder information, percentage amount of black shareholders, etc.
5. When all information provided are verified and calculated, click the green button of “Apply for B-BBEE Certificate”. A confirmation message will be sent to you that your request has been received and the BEE certificate download will be available after it is sent to your email address.
How to renew BEE certificate
Usually, a BEE certificate renewal is required since it is only valid for a year. Renewing your BEE certificate means you have the opportunity to reassess your annual turnover, and B-BBEE level and make sure your company has met all the BEE certificate requirements again.
When your current BEE certificate expires, you can go to the same agency that issued your certificate the first time to complete the renewal or approach another agency. Therefore, you can follow the same guide on “how to get a BEE certificate in South Africa” mentioned above.
As for CIPC BEE certificates, they are valid for 12 months from the date of issue as well but they can not be renewed. Once it is expired, a new application must be filed.
How much does a BEE certificate cost
CIPC BEE certificates are free of charge. The online application service is totally free. However, if your business’s annual turnover is more than R10 million and you need to consult a SANAS accredited agency, the cost will vary. You should pay attention to relevant charges when communicating with the B-BBEE verification agency.
How long does it take to get a BEE certificate
For online application on CIPC, after going through the process of submitting all the necessary documents and information, the CIPC BEE certificate should be with you within 24 hours.
For applications helped by a verification agency, the processing time may vary. Please consult the agency you deal with.
FAQ
1. What is the difference between a BEE affidavit and a BEE certificate?
When a business’s annual turnover is less than R10 million, a BEE certificate is not required. For such companies, their director can complete a BEE affidavit and have it signed by a commissioner of oaths. The BEE affidavit serves as a BEE certificate.
However, BEE certificates are compulsory for QSEs and large enterprises, whose annual turnover is over R10 million. They have to apply and renew after expiration through SANAS-accredited verification agencies.
2. How do I know if my BEE certificate is valid?
Check the information on your BEE certificate and ensure the following:
• The SANAS logo must appear on the certificate as all certificates have to be verified by SANAS accredited agencies.
• The verification agency’s name, company name and address, verification standard, scorecard, and B-BBEE level should appear on the certificate.
• The date of issue and the date of expiration indicating the financial period being verified should be on the BEE certificate. If your certificate is expired, it will not be valid.
• A technical signature and the verification agency’s accreditation number should appear. You can verify this number on SANAS’s website to make sure it is a reliable agency.
Conclusion
Obtaining a BEE certificate is crucial for business owners in South Africa. To apply for one, you have to understand the enterprise categories defined by annual turnover and identify which category your company is under. Based on different enterprise categories, you can either go for an affidavit signed by a commissioner of oath, a CIPC BEE certificate, or a BEE certificate. The application process could be a difficult task at the beginning when you have no clue about “how do I get a BEE certificate”. Hope this article makes it clear to you!
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Erin Lo