B-BBEE Affidavits: Simplifying Compliance for Exempted Micro Enterprises.
Introduction
Broad-Based Black Economic Empowerment (B-BBEE) compliance is crucial for businesses aiming to contribute to economic transformation and inclusivity. The Companies and Intellectual Property Commission (CIPC) plays a significant role in facilitating B-BBEE certification for eligible entities. Let’s explore the process of obtaining B-BBEE certificates through affidavits and understand their implications.
Broad-Based Black Economic Empowerment (B-BBEE) compliance is crucial for businesses aiming to contribute to economic transformation and inclusivity. The Companies and Intellectual Property Commission (CIPC) plays a significant role in facilitating B-BBEE certification for eligible entities. Let’s explore the process of obtaining B-BBEE certificates through affidavits and understand their implications.
What Is an Exempted Micro Enterprise (EME)?
An EME is a business with a turnover of less than R10 million. These enterprises are exempt from the requirement to produce a formal B-BBEE certificate. Instead, they can compile an affidavit indicating their B-BBEE status and shareholding.
The B-BBEE Affidavit Process:
- Eligibility: EMEs can apply for a B-BBEE certificate (affidavit) during business registration or when filing annual returns
- Affidavit Completion: Customers complete an affidavit, which must be signed by a commissioner of oaths
- Stamping and Validity: Once stamped by a commissioner of oaths, the affidavit
serves as a valid B-BBEE certificate. No further verification is required for EMEs - Free of Charge: CIPC provides B-BBEE certificates to EMEs at no cost
- Validity Period: The certificate is valid for 12 months from the date of issue and cannot be renewed. After expiration, a new application must be filed.
- Application Restrictions:
- Only directors/members of entities can apply for B-BBEE certificates; intermediaries or third parties are not allowed
- Providing incorrect shareholder information is a criminal offense
- Applications cannot be amended once submitted; changes are recorded when applying for a new certificate after expiration
- Entities with at least one foreign director/member do not qualify for CIPC B-BBEE certificates
- All directors/members’ contact details must be up to date to receive a unique OTP (One-Time PIN) during the application process
Why Choose B-BBEE Affidavits?
- Simplicity: EMEs benefit from a straightforward process without the need for extensive verification
2. Cost-Effective: Affidavits are free, making compliance accessible to small businesses
3. Legal Compliance: EMEs fulfil their B-BBEE obligations without the burden of formal certification
Conclusion
B-BBEE affidavits empower EMEs to participate actively in economic transformation. By simplifying compliance, CIPC supports these enterprises in contributing to a more inclusive South African economy.
Contact our offices for professional advice in this regard.
Biodiversity Tax Incentives for Protected Areas.
Section 37D of the Income Tax Act No. 58 of 1962 (ITA) introduces South Africa’s first effective biodiversity tax incentive for nature reserves and national parks. These protected areas are declared in accordance with the National Environmental Management:
Protected Areas Act No. 57 of 2003 (NEMPAA). The primary goal of Section 37D is to support biodiversity conservation efforts by providing financial sustainability to critical conservation initiatives nationwide.
How Does Section 37D Work?
- Eligibility: Section 37D applies to land declared as a nature reserve or national park under sections 20 or 23 of NEMPAA
- Title Deed Endorsement: The land must be subject to a title deed endorsement for a minimum of 99 years
- Deduction Percentage: Section 37D allows for a 4% straight-line deduction on the value of the land declared. This deduction is applied to the taxpayer’s taxable income each tax year for 25 years
- Land Valuation: The value of the land is determined based on either:
- Actual cost and improvements
- A prescribed formula that considers municipal or market value
- Right of Use: If a right of use (e.g., agricultural activities or commercial tourism) is maintained, the deduction is apportioned accordingly
- Effective Date: The deduction becomes effective in the year when the land is declared and the title deed endorsement is affected
- Termination of Protected Area Status: If the protected area status is terminated according to NEMPAA, the taxpayer may be liable for certain tax penalties
- Setoff: The deduction can be set off against taxable income or used to increase an assessed loss (tax loss)
The Value of Section 37D
Generally, the value of land is not deductible for tax purposes. However, the Section 37D deduction offers a unique opportunity to deduct the value of land. It provides a reduction in tax liability for communal and private landowners who commit to long-term conservation efforts, securing South Africa’s biodiversity and ecological infrastructure through protected areas.
Do not hesitate to contact our office for professional advice in this regard.
State of the Nation Address 2024.
On February 8, 2024, President Cyril Ramaphosa delivered his eighth State of the Nation Address (SoNA) to a joint sitting of Parliament.
Key Points from the SoNA 2024:
- Youth Unemployment:
- The youth vote poses a significant challenge for the ruling African National Congress (ANC) in the upcoming election
- Over 3 million young South Africans (aged 15–24) are neither in education nor employment
- Ramaphosa announced the launch of the Presidential Employment Stimulus and other initiatives to create over 1.7 million work opportunities
- Platforms like SAYouth.mobi were introduced to help young people access learning and earning opportunities
- National Health Insurance (NHI):
- While no specific timeline was provided, Ramaphosa acknowledged the controversial NHI bill
- The government plans to incrementally implement the NHI, focusing on health system financing, the health workforce, medical products, vaccines, and health information systems
- Infrastructure and Challenges:
- The SoNA was light on big announcements, reflecting a retrospective view of the ANC’s three decades in power
- South Africa faces serious challenges, including crisis in ports, rail networks, and electricity supply, as well as high youth unemployment
- Ramaphosa’s speech emphasized achievements to date and existing plans to address these issues
- Combating Crime:
- Ramaphosa unveiled bold strategies to combat crime and ensure citizens’ safety
- Details of these strategies were not explicitly outlined in the speech, but they signal the government’s commitment to addressing security concerns
In summary, President Ramaphosa’s SoNA 2024 highlighted both achievements and challenges, emphasizing the need for continued efforts to build a stronger, more inclusive South Africa.
Upcoming Budget Speech 2024: Tax Implications and Economic Outlook.
Introduction
On 21st February 2024, South Africa’s Minister of Finance, Enoch Godongwana, will deliver the annual Budget Speech. This highly anticipated event provides insights into the government’s fiscal plans, economic priorities, and tax policies for the year ahead. Let’s delve into what we can expect from this year’s speech.
On 21st February 2024, South Africa’s Minister of Finance, Enoch Godongwana, will deliver the annual Budget Speech. This highly anticipated event provides insights into the government’s fiscal plans, economic priorities, and tax policies for the year ahead. Let’s delve into what we can expect from this year’s speech.
1. Fiscal Challenges
South Africa faces significant fiscal challenges, including a widening fiscal deficit. The country’s public finances are under strain due to rising borrowing costs and increased government spending. Minister Godongwana’s task is to navigate these challenges while ensuring economic stability.
2. Taxpayer Relief
Despite the fiscal pressures, taxpayers can breathe a sigh of relief. Experts believe that substantial changes to taxes are unlikely in this year’s budget. The government recognizes that squeezing taxpayers too hard could hinder economic growth. Instead, the focus may be on bracket creep-not adjusting personal income tax brackets for inflation-to recoup additional revenue.
3. Business Environment
Local businesses continue to face challenges. Supply-chain disruptions, energy crises, and logistics issues impact their operations. The retail industry, in particular, is expected to take a significant hit. Consumers’ reduced disposable income affects buying power at the tills. Businesses must adapt to the changing environment and economic conditions.
4. Revenue Shortfall
The Medium-Term Budget Policy Statement revealed a substantial revenue shortfall of nearly R57 billion for the current tax year and R54 billion projected for 2024/25.It will be interesting to see how treasury intends to fund this shortfall.
5. Balancing Act
Minister Godongwana faces a delicate balancing act. While the government needs additional revenue, it must avoid stifling economic growth. Expect discussions on tax measures aimed at raising approximately R15 billion for the 2024/25 tax year without burdening taxpayers excessively.
Conclusion
As South Africa grapples with economic recovery and fiscal stability, the Budget Speech serves as a critical roadmap. Minister Godongwana’s decisions will shape the nation’s financial landscape, impacting both individuals and businesses. Stay tuned for further details on tax implications and economic strategies.
Sincerely,
