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 Panel to Supply ICT Hardware 2018-07-12 12:00 RFP006/ 2018
Service Theatre Table X 01 2018-06-29 11:00 ZNQ: 8975/ 18 NIEM
Service dental chair at Niemeyer Hospital X 01 KwaZulu-Natal. 2018-06-29 11:00 ZNQ: 8971/ 18 NIEM
C993.02: Reseal of TR75/1 (KM 0.00 to KM 16.50) Holgaten to Oudtshoorn. Designated CIDB Grading: 8CE or higher 2018-07-26 11:00 S048/ 18
Procurement of Human Resource Recruitment & Selection Service (x3) 2018-07-12 12:00 RFP004/ 2018
Inspection, maintenance & repair of the department fleet. 2018-08-19 11:00 ZNB468/ 15T
Supply, Installation and Maintenance of Multi functional Photo Copiers 2018-07-12 12:00 RFP008/ 2018
Appointment of a property management company or an agent to source office accommodation for USAASA for a period of five years in Gauteng. 2018-07-17 11:00 USAASA- OFS/ 04/ 2018
Provision of Legal Services 2018-07-23 11:00 EWSETA008/ 2018
Request for bid for renovation services for the National Health Laboratory Service at Bongani Provincial Hospital, Welkom. 2018-07-16 11:00 RFB 022/ 18/ 19
Terms of Reference for the maintenance of Security Operational Centre for GDED 2018-07-13 11:00 GT/ GDED/ 089/ 2018
Department of Health: RK Khan: Repairs and waterproofing of flat roof over physiotherapy department (contract period: 6 calendar Months). 2018-07-20 11:00 ZNTD 03917W/ WIMS 063046
Department of Public Works: Ethekwini Regional Office-Mayville: Tender Office relocation 2018-07-23 11:00 ZNTD 04435W
Appointment of a service provider to render cleaning and hygiene services for the Department of Rural Development and Land Reform - Mpumalanga Deeds Registry for a period of 24 months. 2018-07-16 11:00 DRDLR (CRD- 10) 2018/ 19
Annual service of Theatre UPS. 2018-07-02 11:00 C23/ 18/ 19
Supply , Installation and Commissioning of Bio-metric system 2018-07-24 11:00 EEC/ T06/ 2018
Appointment of Consultants/Professional Services for designing of plans for the following campuses: 1. Brakpan Campus-classrooms and offices. 2.Springs Campus-classrooms, offices and Hospitality kitchen 2018-07-24 11:00 EEC/ T10/ 2018
Appointment of Service provides to supply, deliver and offload Fertilizer for supplementing. 2018-06-28 11:00 ZNB 4261/ 18A
Appointment of a service provider for the revision of the HDA Business case, organisational design and resourcing framework. 2018-07-16 11:00 HDA/ JHB/ 2018/ 001
Appointment of Consultant/Professional Services for designing of 7 Main Entrances at College delivery sites 2018-07-24 11:00 EEC/ T09/ 2018

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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