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 SA Air Force Bib Woman White Evening Wear for Black Satin Bow Tie, Quantity 2500. Main Contractor or Sub-Contractor must have a valid SABS Capability Report (not older that 12 Months). 2018-07-16 11:00 SPU/ B/ DSS/ 026/ 18
Notice of proposed disposal of 66 Greatmore Street, Woodstock. 2018-07-24 11:00 PM002/ 18
Provision of Stationery for NHLS for a period of 3 years 2018-07-24 11:00 RFB 044/ 18/ 19
Live and on-line auctioneering services for the disposal of technical equipment, movable and immovable assets for 36 months. 2018-07-13 11:00 DID 19/ 06/ 2018
Provision of A3 and A4 Paper for NHLS for a period of 3 years 2018-07-23 11:00 RFB 043/ 18/ 19
The objective of this bid is to appoint a suitable independent service provider that can provide internal audit services on a co-sourced basis to the W&RSETA. 2018-07-13 11:00 NCR/ 2018/ 0003
The Government Printing Works (GPW) is seeking to establish a panel of printers within South Africa 2018-07-13 11:00 GPW- C 68
The objective of this bid is to appoint a suitable service provider to provide the W&RSETA an Integrated IT Management System. 2018-07-13 11:00 ITD/ 2018/ 0005
Appointing a service provider to provide expertise to SANBI and Statistics South Africa in the development of ecosystem accounts and recommendations for advancing the System of Environmental-Economic Accounting (SEEA) Experimental Ecosystem Accounting (EEA) in South Africa. 2018-07-20 11:00 SANBI: BIPA299/ 2018
The appointment of a service provider to render employee health and wellness programme for Public Protector South Africa (PPSA ) Nationally for a period of three (3) years. 2018-07-13 11:00 PPSA 003/ 2018
Printing and Delivery of NPE2019 Voters’ Roll 2018-07-20 11:00 IEC/ LG- 04/ 2018
500 Units X Shelf Strips 2018-07-04 11:00 ZNQ 183/ 18
Request for Proposals for Appointment of A service Provider to Render Events Management Services for the OR Tambo 2018 Inter-Municipal Games including Sponsorship Procurement. 2018-07-20 11:00 SALGA/ 68/ 2018
Supply A4 Photocopy Paper White 80gms 500sheets per Ream 5 Reams Per Box Sabs/Ce/Isoapproved as per Specification 2018-07-09 11:00 ZNQ 310/ 18- 19
Supply Lexmark Toner X651 H31e High Yield Original only as per specification 2018-07-09 11:00 ZNQ 309/ 18- 19
Request for Information: Insurance Management Systems 2018-07-16 12:00 RFI 2018/ 01
Supply *Paper Photocopy White Bond 80gsm A3 (40 Boxes) 2018-06-29 11:00 25/ 18- 19
Appointment of a service provider for the collection, dispatch and delivering freight (courier services) between PSiRA Head Office and all PSiRA regional offices for a period of three (3) years. 2018-07-26 11:00 RFB/ 2018/ PSiRA/ 03
Supply and Install Dental System Complete Package (Hand Piece 2018-06-29 11:00 ZNQ 320 / 18- 19
Nelson Mandela Museum seeks the services of a qualified and experienced company to render internal audit services for a period of three years (thirty six months). 2018-07-13 12:00 NMM 2018- 06

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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