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.
Supply And Delivery of Paraffin (Re-advertisement). 2018-05-17 12:00 FBS/PAR-BTO-CL-MHLM 2017-18
Professional services: short term insurance portfolio for period of 3 years 2018-05-11 14:00 SCM 17/2018
Supply, Delivery, Installation and Commissioning Of 12KV Switchgear Panels. 2018-05-25 12:00 T38.17.18
Tender for the provision of Travel agency and associated services for King Cetshwayo District for the period ending 30 June 2021. 2018-05-28 12:00 KCDM/19/2018
Electrical and mechanical infrastructure for new inlet works at the Riversdale Wastewater Treatment Works – Phase 2B. 2018-06-01 12:00 HES-TECH 13/1718
Re-Advert: Supply and Delivery of ± 3 (Three) on / off Road Motorbikes by an accredited dealer 2018-05-15 12:00 BS 08/04/2018
Supply and delivery of building works material 2018-05-11 14:00 SCM 19/2018
Eden District Municipality Invasive species monitoring control and eradication plan for its properties. 2018-05-11 11:00 ITE/31/17-18
Printing of an IDP Document. 2018-05-11 11:00 ITE/32/17-18
Panel of service providers for supply and delivery of metering kiosk. 2018-05-11 12:00 A034-2017/18
Appointment of a Maximum of Two (02) Consultants for Designs, Supervision, Monitoring and Project Management of all Municipal Buildings and Community Facilities Projects for a period of 3 (three) years on an ad hoc basis 2018-05-29 12:00 BS01/04/2018
Panel of service providers for supply and delivery of streetlight fittings as and when required. 2018-05-11 12:00 A035-2017/18
Provision of bulk processing, printing, posting and distribution of monthly statements. 2018-05-11 12:00 A036-2017/18
Provisioning of professional services for the Offshore Baseline (OSSB) contamination study in the Port of Saldanha. 2018-05-11 10:00 TNPA SLD249/04/2018
Annual large herbivore survey in the protected areas in the North West province for a period of three years. 2018-05-15 11:00 NWPB/RFT/AERIAL GAME COUNT/002/2018
The Appointment of a service provider for the purchasing, delivery and commissioning of the following: Inductively Coupled Plasma Atom Emission Spectroscopy System and Ultra Performance Liquid Chromatograph coupled with an Ultraviolet Detector. 2018-05-17 11:00 4.4.12.2/4/18
Supply and Delivery of Dairy Products to Gauteng Provincial Government (GPG) Departments Institutions and State Information Technology Agency (SITA) for a period of 36 months. 2018-05-18 11:00 GT/GPT/068/2018
Supply and Delivery of Dry Groceries and Toiletries to GPG Departments and SITA for a period of 36 Months. 2018-05-18 11:00 GT/GPT/069/2018
Request to go out on an urgent RFB to acquire an alternative suitable office space for SITA Mpumalanga Nelspruit through an operating lease for an initial minimum period of 5 years with an option to / renew/ extend for a maximum of another (5) five years. 2018-05-18 11:00 RFB 1731/2018
Rendering of Security Services for Various Areas within the WC024 Municipal Jurisdiction, Until 30 June 2021 2018-06-01 12:00 BSM 87/18

Pages

Tender adjudication process

The SBD/WCBD6.1 document must form part of all bids invited.  It contains general information and serves as a claim form for preference points for Broad -Based Black Economic Empowerment (B -BBEE) Status Level of Contribution, and explains how tenders or bids are decided.

The document says:

  • The bidder obtaining the highest number of points will be awarded the contract.
  • Preference points shall be calculated after prices have been brought to a comparative basis.
  • Points scored will be rounded off to two decimal places... Read More
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