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.
Information on Water Treatment System 2019-03-01 10:00 CORP 4647
Consulting engineering services for the routine road maintenance of national route N2 section 10 km 73.40 to section 11 km 71.74 and national route R75 section 1 km 0 to section 2 km 25.93 and national route R335 section 1 km 0 to km 30.12 2019-02-04 10:00 X.003-031-2019/1F
Panel of professional services (civil, building, mechanical, electrical and environmental) for a period of three (03) years 2019-02-08 12:00 T32/2018
The Replacement and Maintenance of Signages at O R Tambo International Airport (ORTIA) for A Period Of 60 Months 2019-01-31 11:00 COR5652/2018/RFP
Supply and Delivery of Stationery for SABC Offices at Auckland Park on an “as and when” Requiredd Basis, for a Period of Three (3) Years 2019-01-11 12:00 RFP/LOG/2018/19
Maintenance of Electricals and HVAC Controls Systems 2019-02-01 11:00 ORT5749/2018/RFP
Replacement of TVOB camera equipment. 2018-12-18 12:00 RFP/TVO/2018/76
Supply and Delivery of 10 X 290 2wd Sunroof 60 Kw Tractors for Zululand District Municipality 2018-12-19 12:00 ZDM 111/2018
An Enabling Agreement (EA) for Design, Supply, Delivery, Installation, Commissioning, Training, Support and Repairs of Operational Technology (OT) Voice and Regional Operational Voice Control System on an "as and when required" basis for a period of 5 (Five) years. 2019-02-07 10:00 CORP4640
Refurbish Fit and Install Lime Feeder Machine at Withoogte Purification Plant 2018-12-19 12:00 6/5/2/387
Eskom to conduct tests at the supplier's laboratory for determination of the current withstand of medium voltage overhead line hardware over period of three (3) years on an "as and when required" basis 2019-02-08 10:00 CORP 4609
Appointment of service provider to upgrade and installation of a security systems at Council for Geoscience Head Office. 2019-02-08 11:00 CGS-2018-041A
Request for proposal for pilot project for leak detection on Rand Water pipelines using satellite technology 2019-02-08 12:00 RFP00552/18
Compilation of the 2017/2018 MIG Annual Report 2018-12-20 12:00 RFQ/501
Request for proposal for development of economically viable solutions for the handling, disposal and reuse of water treatment residue at Rand Water 2019-02-08 12:00 RFP00553/18
Copper Tube 28mm Class 2, Sabs 460 2018-12-21 11:00 SQ12181326
Couplings 15 Mm X 20 Mm Reducing Male I.T.C. Cobra Or Q D-2rxs - Sans 10525/1 Approved. 2018-12-21 11:00 SQ12181326
Elbow 3/4" X 22mm X 90 Deg. Male I.T.C. D8xs (Sabs Approval Required On Coupling) 2018-12-21 11:00 SQ12181326
Developing, hosting and managing Black Umbrellas virtual incubation platform 2019-01-21 17:00 No reference supplied
Coupling 15 Mm Straight C.T.C. D-1xs (Sabs Approval Required On Coupling) -Sans 10525/1 Approved 2018-12-21 11:00 SQ12181326

Pages

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
Free Keyword search

Search all tender notices for FREE!

No subscription or registration required!

You can also search by the reference of the the tender.

Advanced search

Search by Issuer, Region or Sector, individually, or using any combination of the three.