Less Red Tape for Small Businesses

Less Red Tape for Small Businesses

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Government is scrapping BEE verification fees for small businesses, reducing the red tape that has been hindering small business from prospering.

Ashley Vandiar, the South African Institute of Chartered Accountant’s project director for Assurance, confirms that this is directly in line with the objective of the new Companies Act and will go a long way in promoting entrepreneurship and economic growth.

“We fully support the initiative to scrap verification fees for small businesses as this will promote a spirit of compliance with Black Economic Empowerment (BEE) without companies having to incur costs while doing so.

“Going forward, only an affidavit confirming the BEE status will be required for a company to be recognised.”

The move could increase fronting

However, Vandiar notes that merely obtaining an affidavit to gain recognition for BEE purposes is likely to increase fronting, while he warns that fronting is a serious common law offense.

“The new legislative changes are going to make it a criminal offense with serious consequences such as being sentenced up to 10 years in jail and paying a fine of 10% of the company’s annual turnover,” Vandiar says,  still expressing concern regarding the ethical reliance that can be placed on affidavits alone and those entrusted to issue them.

CAs can verify BEE status

Vandiar also encourages government to consider the use of South African Chartered Accountants [CAs(SA)] in the verification of small businesses saying that “chartered accountants are well versed with current and future legislative issues surrounding BEE and they currently provide small exempted micro enterprises with level 4 and level 3 contributor status certificates.

Alison Job
Alison Job holds a BA English, Communications and has extensive experience in writing that spans news broadcasting, public relations and corporate and consumer publishing. Find her at Google+.