South Africa Proposes New BEE Tax as Experts Signal End of Current Framework

• Former Reserve Bank Deputy Governor Kuben Naidoo backed a proposal to replace BEE with a new corporate tax surcharge
• Entrepreneur Alan Knott-Craig proposed a 3% revenue levy that could raise R40 billion a year for a national Transformation Fund
• Economist Dawie Roodt said the shift signals the beginning of the end of BEE as South Africa has known it

A new debate is taking shape in South Africa over how the country funds black economic empowerment, with two high-profile proposals on the table and growing signals from government that the existing BEE framework may be heading for a major overhaul.

Entrepreneur Alan Knott-Craig, the founder of Herotel and Fibretime, submitted a proposal to Trade and Industry Minister Parks Tau last year suggesting that companies pay a 3% levy on their revenue. In return, those companies would receive a Level 3 B-BBEE certificate. According to Daily Investor, Knott-Craig chose revenue as the base rather than profit, arguing that profit figures are too easy to manipulate through accounting decisions. He estimated the levy could generate R40 billion annually, or R120 billion across three years, and that the financial burden would be comparable to what businesses currently spend on B-BBEE compliance.

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Naidoo's 5% surcharge plan

Kuben Naidoo, a former Reserve Bank Deputy Governor who now serves as Head of Corporate Payments at Investec South Africa and sits on the presidential economic advisory council, has put forward a different approach. His plan calls for a voluntary 5% corporate income tax surcharge, which he estimates would raise around R5 billion each year. Companies that pay the surcharge consistently would be exempt from all other BEE requirements. The money would be divided between state-owned finance institutions and South African banks, which would commit to channelling funds toward black-owned businesses and enterprises in townships and rural areas.

Both proposals connect to President Cyril Ramaphosa's Transformation Fund, which he announced during his 2025 State of the Nation Address as a R100 billion vehicle to support black-owned and small businesses, with a particular focus on women, youth, and people with disabilities. Minister Tau described the fund as an independent entity built on public and private partnerships, with a digital portal to track investments, job creation, and economic impact in real time.

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Is this the end of BEE?

Efficient Group Chief Economist Dawie Roodt believes the writing is on the wall for BEE as it currently exists. He pointed to Ramaphosa's 2026 State of the Nation Address, in which the President acknowledged that the BEE framework is undergoing a review to better support transformation and inclusive growth. Roodt argued that the existing policy has cost the economy dearly, citing a 2025 study by the Free Market Foundation and the Solidarity Research Institute, which estimated BEE's annual cost to the country at between R145 billion and R290 billion.

He added that South Africa's persistently low investment levels are partly a consequence of BEE acting as a deterrent to incoming capital, and that meaningful economic growth will only follow a correction of the country's macroeconomic policies.

3 Other Briefly News stories about BEE

• Elon Musk proposed an alternative to complying to BEE in South Africa.
• President Cyril Ramaphosa rejected Elon Musk’s claim that BEE laws are racist, saying they are designed to address past injustices.
• A research report found that one South African company spent 307% of its annual profit on BEE compliance while achieving Level 2 status.

Source: Briefly News