Issue Date: 
Thursday, January 31, 2019

Tenders and VAT

By Werner van Rooyen

31 January 2019

One question that gets raised during each HowtoTender Workshop is must my business (or I) be registered for Value Added Tax (VAT) in order for me to respond to a 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 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 be 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.

To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops presented in Johannesburg, Pretoria, Durban, Port Elizabeth and Cape Town. Book and pay online at www.howtotender.co.za. Please contact Estelle at Estelle@howtotender.co.za should you require more information.

This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd which specializes in tender consulting and tender training.

Title Closing Date Tender No.
CapeNature seeks a contractor for the installation of a Water and Waste Water Treatment Solution at the Vrolijkheid Nature Reserve, CIDB and Local content conditions apply 2019-09-13 11:00 WCNCB 01/ 08/ 2019
Plant Pathogen Quarantine Facility Upgrade 2019-09-09 11:00 ARC/ 03/ 07/ 19
The Appointment of a Contractor for The Supply and Installation of Outdoor Gym Equipment, Playground Equipment as well as Outdoor Furniture and Landscape Material for the Rehabilitation of Four ILLegal Dump Sites Within Gauteng Province for a Period of 3-Months -3CE/3GB Or Higher 2019-09-06 11:00 GT/ GDARD/ 051/ 2019
Completion Of Coega Vulindlela Vilage Phase 1C 2019-09-09 12:00 CDC/ 107/ 19A
Supply, deliver, install and commissioning of generators : Illembe District 2019-09-25 11:00 ZNB 9709/ 2019- H
Supply, deliver, install and commissioning of generators : King Cetswayo District 2019-09-27 11:00 ZNB 9704/ 2019- H
Replacement, service and maintenance of lifts (16 units) 2019-09-19 11:00 ZNB 5702/ 2019- H
Supply, deliver, install and commissioning of generators : Zululand District 2019-09-30 11:00 ZNB 9685/ 2019- H
Supply, deliver, install and commissioning of generators : Amajuba District 2019-09-25 11:00 ZNB 9707/ 2019- H
Supply, deliver, install and commissioning of generators : Ethekwini District 2019-09-25 11:00 ZNB 9710/ 2019- H
Supply, deliver, install and commissioning of generators : Umgungundlovu District 2019-09-27 11:00 ZNB 9705/ 2019- H
Supply, deliver, install and commissioning of generators : Ugu District 2019-09-27 11:00 ZNB 9703/ 2019- H
Supply, deliver, install and commissioning of generators : Umkhanyakude District 2019-09-30 11:00 ZNB 9706/ 2019- H
Supply, deliver, install and commissioning of generators : Umzinyathi District 2019-09-30 11:00 ZNB 9708/ 2019- H
Supply, deliver, install and commissioning of generators : Harry Gwala District 2019-09-25 11:00 ZNB 9702/ 2019- H
Supply, deliver, install and commissioning of generators : Uthukela District 2019-09-30 11:00 ZNB 9711/ 2019- H
Term Contract For Turnkey Services for Ground Source Develop (Planning, Design, Geo-Hydriological Studies, Sitting, Drilling, Testing And Equipping) Preventative and Corrective Maintenance Of Bore Holes Together With Water Reticulation : to uMkhanyakude District Health Facilities : KZN Health 2019-09-13 11:00 ZNB 5753/ 2019- H
Supply and Installation of Clear VU Fence 2019-09-18 11:00 SCSC 001/ 2019
Appointment of a Panel of Service Providers To Provide Temporary Residential Accommodation During Disasters / Emergencies, to The KZN Department of Human Settlements’ for a Period not Exceeding 36 Months 2019-08-30 11:00 ZNB52/ 2019/ 20HSE
Tourism Kwazulu-Natal (TKZN) invites tenders for construction of access road, new gatehouse, storm water infrastructure and landscaping at Mandela capture site. The works comprise of a guardhouse, access road, pedestrian walkway, attenuation ponds, and fencing. The works to be executed in 6 months. 2019-09-13 12:00 TKZN NO: 08/ 2019

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Extension of validity period

By Werner van Rooyen

www.howtotender.co.za

31 January 2019

Those of you who are familiar with responding to tenders will know that it is common practice for procuring entities to extend the bid price validity period. We received the undermentioned queries regarding the extension of the validity period of the bid price.

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