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 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.
Construction of Nongiqa Low Level Bridge Crossing. 2018-04-20 12:00 ULM-INFR-033/18
Appointment of a Panel of Maximum 4 (Four) Contractors for the Replacement and Cut Over of Asbestos Cement Pipes to Pvc Pipes In Steve Tshwete Local Municipality Area for a period of 36 months as and when required 2018-04-25 12:00 BS07/03/2018
The Supply and Delivery of Wet Rations, various dairy products to the Department of Defence (Port Elizabeth area). 2018-08-16 11:00 SPSC- B- 105- 2017
10 Units, Pre filled surgical adhesive syringe size 5ml 2018-04-02 11:00 ZNQ: 1181/ 17/ 18
Provision of Professional Services in Respect of the Management of the City of Cape Town Railway to Comply with the Requirements of eh National Railway Safety. 2018-04-23 10:00 270C/2017/18
10 Units, Non absorbable monofilament cv-7 size 46cm-18 in 9mm needle 2018-04-02 11:00 ZNQ: 1183/ 17/ 18
Provision of a Service Provider: Accredited Training Related to Project Management and Contract Administration. 2018-04-23 10:00 271C/2017/18
The appointment of a service provider for the supply and delivery of perfusion and cardiothoracic surgery requirements to Groote Schuur-, Tygerberg- and Red Cross War Memorial Children’s Hospital for a period of three (3) years. 2018-04-13 11:00 TBH 514/ 2017
Supply and delivery of 5-tons (5000kg) diesel forklifts for vehicles to South African Police Service for a period of two (2) years, Nationally. 2018-04-24 11:00 19/1/9/1/75TV (17)
Appointment of a capable service provider to render services in respect of travel, transport and accommodation arrangements for the Department of Sport and Recreation South Africa for a period of 36 months. 2018-04-23 11:00 SRSA009/ 2017- 18
A Panel of Service Providers For Plumbing Services: Maintenance & Service of Plumbing Infrastructure at Municipal Buildings and Facilities of Steve Tshwete Local Municpality for a period of three (3) years 2018-04-19 12:00 BS02/03/2018
Supply and delivery of 5 tons (5000kg) diesel forklifts for vehicle safeguarding services to South African Police Service for a period of two (2) years, nationally. 2018-04-24 11:00 19/ 1/ 9/ 1/ 75 TV (17)
Tenders are hereby invited for Short-term Insurance Broker Services for the period 1 July 2018 to 30 June 2021. 2018-04-24 11:00 T 2018/001
Provision of Automated Culture Media Preparatory for NICD, to National Health Laboratory Services (NHLS), for a period of three years 2018-04-23 11:00 RFB075/ 17- 18
Supply,Deliver and Install air-conditioner (24 Months Contract). 2018-04-26 12:00 ULM-CORP008/18
Re-Advertisement: Provision and Fitting of 500m X 2.1m anti Climb, Antivandal, anti Cut High Security Welded Wire Mesh Fence at Steve Tshwete Municipal Service Centre, Middelburg 2018-04-10 12:00 BS08/03/2018
Repairs and Maintenance Services of Access Control, CCTV System and Electric Fence, to National Health and Laboratory Services (NHLS), Nationally for a period of three (03) years. 2018-04-24 11:00 RFB091/ 17- 18
Two (02) tractor: four wheel drive: 151 - 180kw. 2018-04-24 11:00 S009/ 18
One (01) tractor: crawler: 24 - 26t class 6. 2018-04-24 11:00 S008/ 18
Appointment of service providers to remove household garden refuse in the Mossel Bay Municipal area. 2018-04-26 12:00 TENDER 94-17/18


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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