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.
Appointment of a Professional Consulting Engineer For Planning, Design and Project Management: Refurbishment and Upgrading of Kameelmond Wastewater Treatment Works 2018-10-19 14:00 TN078/2018
Supply and delivery of fittings for MIG water meters project- Brandfort. 2018-09-26 12:00 2018/09/002
Supply and delivery of fittings for MIG water meters project- Winburg. 2018-09-26 12:00 2018/09/004
Supply and delivery of 4 core cables. 2018-09-26 12:00 13/09/2018
Quotation for 3x computer monitors, 3 laptops. 2018-09-26 11:00 KCDM/QUOTE/31/2018
Design, planning and project management of a steel structure with rooftop for the Dawid Kruiper Municipality 2018-10-12 14:00 TN078/2018
Development of an app & social media Platforms. 2018-09-26 11:00 C2/2018
Supply and delivery of digital camera and video camera. 2018-09-25 12:00 IHLM-46/09/2018-19/CS
Supply and delivery of chemicals 2018-09-25 12:00 Q005826
Supply and delivery of dry beans for led projects. 2018-09-25 12:00 Q005828
Supply and delivery of Geopositinal System (GPS) devices. 2018-09-25 12:00 Q005865
Supply and delivery of tools: Electrical Department 2018-09-27 11:00 FQ/SM : 2/19
Area East Career Expo Catering 2018- Exhibitors 2018-09-25 10:00 SM11900107
Supply, delivery and installation of a water flow meter system 2018-10-02 11:00 FQ/SM : 25/19
Consultant required to provide Monitoring, Evaluation, Accountability and Learning (MEAL) technical support to SCSA projects in Gauteng Province 2018-10-04 16:00 No reference number supplied
Supply of Services to Repair Traffic Signals and Associated Equipment within the Breede Valley Municipality 2018-09-27 11:00 288145
Consultancy services for SAP grant management implementation support 2018-10-05 15:00 ET-AUC-78675-CS-QCBS
Supply and Delivery of VBTS Collimator Insulating Piece. 2018-09-25 11:00 Themba LABS – RFQ/2018/19:84
Supply, delivery and Laying of Tiles 2018-09-28 11:00 280918
Procurement of Bus Services for Spring Schools – 4 x 30 Seater Buses. 2018-09-25 11:00 iThemba LABS – RFQ/2018/19:92

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Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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