The Tourism Sector Code within the B-BBEE Act

In this article we focus on the basic criteria of the Tourism Sector Charter within the scope of the B-BBEE Act, Number 53 of 2003.

The amended sector code was gazetted on 20 November 2015. The amended charter is extensive in detail and contains criteria vastly different to that of other sector charters.

The Amended Tourism B-BBEE Sector Code applies to all enterprises within the Tourism Sector and all parts of the value chain in that sector including:

  • Hospitality and related services
  • Travel and related services
  • Hotels
  • Resort properties and timeshare
  • Bed and breakfast (B&B’s)
  • Restaurants (not attached to hotels)
  • Conference venues (not attached to hotels)
  • Professional catering
  • Tour wholesalers
  • Tour operators
  • Travel agents
  • Guesthouses
  • Game lodges
  • Backpackers and hostels
  • Attractions, Casinos
  • Consulting and professional services
  • Tourist guides
  • Car rental companies
  • Coach Operators

There are five B-BBEE elements, namely:

  • Ownership
  • Management Control
  • Skills Development
  • Enterprise and Supplier Development and
  • Socio-Economic Development

The Priority elements are as follows:

  • Ownership: The sub-minimum requirement for Ownership element is 40% of Net Value (40% of the 8 points).
  • Skills Development: The sub-minimum requirement for Skills Development element is 40% of the total weighting points (excluding bonus points).
  • Enterprise and Supplier Development: The sub-minimum requirement for Enterprise and Supplier Development element is 40% of the total weighting points of each of the three measuring categories within the Enterprise and Supplier Development element, namely; Preferential Procurement, Supplier Development and Enterprise Development.

For the avoidance of doubt, this means that the measured entity must achieve at least:

  • 10 points under the Preferential Procurement
  • 4 points under the Supplier Development and
  • 2 points under the Enterprise Development.

Compliance to priority elements:

Large Enterprises are required to comply with all the priority elements. Qualifying Small Enterprises (QSEs) are required to comply with at least two priority elements, which are Ownership (compulsory element) and either Skills Development or Enterprise and Supplier Development.

Discounting principle effect:

Non-compliance with the 40% sub-minimum requirements of any of the priority elements will result in the measured entity’s B-BBEE Status Level and corresponding B-BBEE Recognition Level being discounted by one level down until the next applicable verification period in which the measured entity can demonstrate compliance with the 40% sub-minimum requirements.

Only the discounted level will appear on the B-BBEE certificate.

The following thresholds apply:

  • Exempted Micro Enterprise: total revenue of less than R 5 Million per annum,
  • Qualifying Small Enterprise: a total revenue between R 5 Million and R 45 Million per annum and,
  • a Large Enterprise: a total revenue of over R 45 Million per annum.

This article is provided for information only, and does not constitute the provision of professional advice of any kind.

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