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

Amended Codes of Good Practice (2017)

Amended Code Series CSC400: Measurement of the Preferential Procurement and Supplier Development Element of Broad-Based Black Economic Empowerment in the Construction Sector

Statement CSC400: The General Principles for Measuring Preferential Procurement and Supplier Development

6. Exclusions from Total Measured Procurement Spend


The following list provides 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 Salaries, wages, remunerations, and emoluments: Any amount payable to South African Employees as an element of their salary or wage and any emolument or similar payment paid to a director of a Measured Entity. (The non-South African portion of salaries and payroll must be added to the Total measured Procurement spend, as per 5.13 above).


6.3 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;


6.4 Empowerment related procurement:
6.4.1 Investments in or loans to an Associated Enterprise;
6.4.2 Investments, loans or donations qualifying for recognition under any statement under Code series CSC400 or CSC500;


6.5 Imports: the following imported goods and services:
6.5.1 Imported capital goods, components or services for value-added production in South Africa provided that: There is not sufficient existing local production of such capital goods, components or services; and Importing those capital goods, components or services promotes further value-added production within South Africa;
6.5.2 Imported goods and services other than those listed in paragraph 6.5.1 if there is not sufficient local production of those goods or services including, but not limited to, imported goods or services that ; Carry a brand different to the local produced goods or services; or Have different technical specifications to the locally produced goods or services.
6.5.3 The Department of Trade and Industry (The DTI) will, from time to time consult with the CSCC and issue PRACTICE NOTES with regard to the provisions on import exclusions.


6.6 Intra-group procurement: Where the Measured Entity is conducting a consolidated verification of itself as holding entity together with its subsidiaries, then all intra-group procurement of goods and services amongst the group entities forming part of the consolidated verification are excluded.


6.7 Non-discretionary procurement: Where the Measured Entity is forced to make use of a particular Supplier due to tender requirements or client specifications it may exclude such procurement.