Issue Date: 
Monday, September 22, 2014

Tenders and VAT

By Werner van Rooyen

22 September 2014

One question that gets raised during each How to Tender Workshop is must my business (or I) be registered for Value Added Tax (VAT) in order for me to tender? Or, must I register my business for VAT?

The answer according to the VAT Act, 1991 (Act No. 89 of 1991) is simple:

  • If your turnover is more than R1.2 million per annum then you have to register your business (or yourself in the case of a sole proprietor) for VAT.
  • There are commodities that are exempt from VAT and if you supply these commodities you do not have to register for VAT. I am not going to go into these technical issues for now.

There is such a thing as voluntary registration. You can register your business voluntary for VAT if your turnover was more than R50 000 for the previous twelve months preceding your registration application.

It is about voluntary VAT registration that I want to talk about. One thing that is a fact in South Africa is that businesses are legislated to death. There are so many laws and Regulations that have to be complied with that entrepreneurs struggle to focus on the most important thing in their business and that is sales. My advice is to stay un-registered for as long as possible - especially if you are a start-up business or a small business. I ask the business owners why they want to give themselves more paper work to do if it is not compulsory to register for VAT.

In my opinion the problem lies within big business. They force the small businesses to register for VAT otherwise they do not want to do business with the small business. It starts with big business` procurement procedures from which they do not want to deviate - you as small business owner must supply them with a TAX INVOICE otherwise they cannot do business with you. This is nonsense; big business must compromise to assist the small business to grow.

Then there is the matter of pricing. Theoretically there should be no difference in price between a VAT registered and a Non-VAT registered supplier. If they procure form the same wholesaler and their mark-up is the same then the price should bee the same. The only difference being the VAT that the registered supplier has to add to its price.

Although there are ample places in the Standard Bidding Documents that ask for your business` VAT registration number it is not a pre-requisite to be registered for VAT in order to respond to a Tender or a Request for Proposal or any other name it might be called. You might be confronted with a Tender Official that says you have to be registered for VAT, if so, just remind that Tender Official of the VAT Act.

The most important thing to remember when it comes to VAT when you respond to a tender is when it comes to pricing - 99.99% of the time your price must include VAT.

If you want to learn more about VAT and any other tender issues be sure not to miss out on our tender workshops. Visit our website www.how2tender.com for more information on our tender workshops or invest in our Tender Manual that is available as an eBook.

Until next time.

Title Closing Date Tender No.
Tenders are invited to provide Lumion Essentials Training 2017-12-04 11:00 CSQ11171189
Supply: Gloves 2017-11-29 10:00 GA1180192A
Tenders are invited to provide Revit Advanced Training 2017-12-04 11:00 CSQ11171189
Tenders are invited to provide Revit Intermediate Training 2017-12-04 11:00 CSQ11171189
Supply 20 each x harness; weedeater 2017-11-28 10:00 GA1180193A
Tenders are invited to provide Revit Essentials Training 2017-12-04 11:00 CSQ11171189
Supply: Plants 2017-11-28 16:00 GC11800356
Bidders are invited to provide training for Intermediate Leadership Programme 2017-12-04 11:00 CSQ11171187
Bidders are invited to Repair Scrubber Machine for Fresh produce market Scope of Work 2017-12-04 11:00 CSQ11171187
Supply Klorman Cartridges for Water Purifying 2017-11-28 16:00 GC11800357
Manufacture, Supply and Commissioning of an Inkjet Printing System to Upgrade an Existing Wide Web Printing Press at the Government Printing Works. 2018-01-15 11:00 GPW- M 361
Appointment of a service provider to render hygiene services for the Department of Rural Development and Land Reform: Office of the Chief Registrar of Deeds, Deeds Registry Pretoria, Chief Surveyor General and Surveyor General for a period of 36 months 2017-12-15 11:00 DRDLR (CRD- 08) 2017/ 18
Supply and print ambulance return books x 600 units 2017-12-01 11:00 ZNQ 459/ 17/ 18
Supply and Deliver Bark Chips to City Parks Depot , Sacks Circle Drive Bellville South. 2017-11-28 16:00 GC11800358
Stationery items 2017-12-01 11:00 ZNQ 130 / 2017/ 2018
Appointment of a service provider to render Security Services in Klerksdorp Regional Office for a period of 24 months 2018-01-05 11:00 DMR/ 018/ 2017/ 18
Appointment of three service providers to supply and deliver fresh fruit as and when required over a period of twenty four months (24) . 2017-12-15 11:00 NRFNZG- 027- 2017/ 18
Supply carbolic soap 2017-11-28 16:00 GC11800360
Appointment of a service provider to render Security Services in Rustenburg Regional Office for a period of 24 months 2018-01-05 11:00 DMR/ 019/ 2017/ 18
Appointment of two service providers to supply and deliver fresh and processed vegetables as and when required over a period of one (1) year 2017-12-15 11:00 NRFNZG- 028- 2017/ 18

Pages

Functionality and Tenders

In all competitive bids (tenders) you as the bidder will have to respond to Functionality. You will need to score a set minimum number of points, measured as a percentage, on Functionality of a competitive bid (tender) in order to advance to the next phase of evaluation in the tender process.

Usually Organs of State evaluate competitive bids (tenders) as follows:

  • The tender response is evaluated on Functionality where the bidder must score points out of a maximum of 100 points.
  • A threshold of between 65 to 75 out of 100 points... Read More
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