What we know so far
A voluntary BEE tax is being debated in South Africa, under which companies could pay a fixed percentage of revenue into a transformation fund instead of navigating the full black economic empowerment scorecard.
The idea is a proposal, not a law. No such tax has been enacted, tabled in Parliament, or formally adopted by the government, and several competing versions are circulating at once.
The most discussed version comes from entrepreneur Alan Knott-Craig Jnr, founder of Herotel and Fibretime. He proposed that unlisted companies pay 3% of gross revenue in exchange for an automatic Level 3 broad-based BEE rating.
Knott-Craig submitted the plan to Trade, Industry and Competition Minister Parks Tau, who publicly responded “challenge accepted”, signalling government interest in testing it.
The proposal gained fresh prominence in July 2026 when Kuben Naidoo, a former South African Reserve Bank deputy governor now at Investec, backed the concept and put forward his own variant.
South African Institute of Taxation chief executive Keith Engel then published an analysis weighing the idea’s merits and risks, which is the immediate trigger for the current round of coverage.
All of these are proposals and commentary. What is confirmed is that government is separately developing a Transformation Fund, and that these voluntary-tax ideas are being floated as a way to feed it.
What a voluntary BEE tax would mean for business and investment
For businesses, the appeal is a simpler, more predictable path than the current BEE scorecard, which many firms find costly and administratively heavy.
Under Knott-Craig’s model, a company could effectively buy an automatic Level 3 rating by paying the levy, avoiding much of the compliance machinery. Level 3 is the highest rating a company can reach without changing its ownership.
Proponents argue this creates what Engel called a regulatory escape hatch, which could be attractive to high-margin or foreign businesses reluctant to invest while BEE ownership rules apply as they do now.
The relevance to investment is direct. BEE requirements have been raised by the United States and by the Trump administration as an impediment to foreign investment and a point of friction in trade talks, which is part of why the debate has intensified.
There is a design objection that matters for ordinary businesses. Engel argued that basing the levy on gross revenue rather than net profit would penalise low-margin, high-turnover businesses such as grocery chains far more heavily than profitable ones.
He noted that a surcharge on income tax, calculated on profit, would be easier for the South African Revenue Service to administer, though it would need a higher rate than 3% to raise a similar amount.
For workers and communities, the stated purpose is funding transformation. Supporters say the money would bankroll black-owned and small businesses at scale without imposing a new compulsory tax on everyone. Critics counter that the benefit depends entirely on whether the funds are spent well.
Key details and figures
The competing proposals on the table, none yet adopted:
| Proposal | Mechanism | Projected to raise | Status |
|---|---|---|---|
| Knott-Craig plan | 3% of gross revenue for automatic Level 3 BEE | About R40 billion a year | Submitted to Minister Tau, under consideration |
| Naidoo plan | Voluntary 5% corporate income tax surcharge | About R5 billion a year | Proposed, not adopted |
| Tau Transformation Fund | 3% of net profit after tax for 30 BBBEE points | Part of a R100 billion fund | Government proposal in development |
Knott-Craig has argued that revenue is harder to manipulate than profit, saying “profit can be reduced through accounting choices”. He estimates his levy would raise about R40 billion a year, or R120 billion over three years.
Naidoo’s version is different in both rate and base. He has proposed a voluntary 5% surcharge on corporate income tax, which he estimates would raise about R5 billion a year, assuming roughly a third of firms opt in, based on corporate tax collections of about R320 billion in 2024/25.
Under Naidoo’s model, companies paying the surcharge would have no other BEE obligations or reporting requirements, and the funds would be split between state finance institutions and banks lending to black-owned and township businesses.
The government’s own vehicle is the Transformation Fund, which President Cyril Ramaphosa promoted in his 2025 State of the Nation Address. Minister Tau has proposed a fund of about R100 billion, administered by the National Empowerment Fund.
A revamped version of that fund, reported by Business Day in January 2026, would let companies earn 30 broad-based BEE points by contributing 3% of net profit after tax, double the points currently available for the same outlay.
Business Unity South Africa has signalled willingness to participate in the Transformation Fund while pushing for clarity on its design and governance.
The proposals therefore differ on three key points: whether the base is gross revenue or net profit, what a company gets in return, and how the money is administered.
What happens next
Nothing changes for any business today. These remain proposals, and no legislation, regulation or gazette gives effect to a voluntary BEE tax.
The nearest live government process is the Transformation Fund, whose design, governance and legal routing are still being worked out. Money raised by the state would ordinarily have to flow through the National Revenue Fund, which is National Treasury, before distribution, and it is not confirmed that Treasury supports the various proposals.
Two questions will decide whether any of this proceeds.
The first is design. Government would have to choose between a gross-revenue base, a net-profit base, or an income-tax surcharge, each with different effects on different types of business.
The second is trust. Critics, including Engel, warn that the value of any fund depends on how the money is spent, pointing to poor outcomes from other state funding pools. Engel said plainly that “funding pools don’t have much success in South Africa”, and cautioned that a voluntary scheme could be made mandatory if a voluntary version underperforms.
Supporters respond that a well-run fund backing genuine black-owned enterprises could rebalance access to capital in a way the current scorecard has not.
There is genuine uncertainty across the board. There are competing proposals, no adopted model, no confirmed Treasury position, and no timeline. Whether a voluntary BEE tax becomes policy, and in what form, is unresolved.
