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Broad Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Codes of Good Practice on Black Economic Empowerment

Code Series 500: Measurement of the Preferential Procurement Element of Broad-Based Black Economic Empowerment

Statement 500 : The General Principles for Measuring Preferential Procurement

6. Exclusions from Total Measured Procurement Spend

 

The following list is the only permissible exclusions from Total Measured Procurement Spend recognisable in terms of paragraph 5:

 

6.1) Taxation: any amount payable to any person which represents a lawful tax or levy imposed by an organ of state authorised to impose such tax or levy, including rates imposed by a municipality or other local government.

 

6.2) Public sector procurement:

 

6.6.1) all goods and services procured from organs of state and public entities listed in Schedule 1 of the Public Finance Management Act of 1999. Despite this, procurement by a Measured Entity from a local government authority, which is a reseller of that service, is measurable at the B-BBEE Recognition Level of the primary supplier of the service; and

 

6.6.2) in any event, any procurement of any goods or services from any organ of state or public entity that enjoys a statutory or regulated monopoly in the supply of such goods or services, is excluded.

 

6.3) Salaries, wages, remunerations, and emoluments: any amount payable to an employee as an element of their salary or wage and any emolument or similar payment paid to a director of a Measured Entity.

 

6.4) Pass-through third-party procurement: all procurement for a third-party or a client that is recorded as an expense in the third-party or client's annual financial statements but is not recorded as such in the Measured Entity's annual financial statements.

 

6.5) Empowerment related procurement:

 

6.5.1) investments in or loans to an Associated Enterprise;

 

6.5.2) investments, loans or donations qualifying for recognition under any statement under Code series 600 or 700.

 

6.6) Imports: the following imported goods and services;

 

6.6.1) imported capital goods or components for value-added production in South Africa provided that;

 

6.6.1.1) there is no existing local production of such capital goods or components; and

 

6.6.1.2) importing those capital goods or components promotes further value-added production within South Africa;

 

6.6.2) imported goods and services other than those listed in paragraph 6.6.1 if there is no local production of those goods or services including, but not limited to, imported goods or services that -

 

6.6.2.1) carry a brand different to the locally produced goods or services; or

 

6.6.2.2) have different technical specifications to the locally produced goods or services.