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.
Supply and Delivery of Wet Rations, various fish (fresh and frozen) to the Department of Defence (Grahamstown area). 2018-08-02 11:00 SPSC- B- 094- 2017
Cleaning of ablutions for Addo Elephant National Park for a period of three (3) years 2018-04-19 11:00 GNP- 028- 17
Supply and Delivery of Wet Rations, frozen vegetables to the Department of Defence (Mthatha area). 2018-07-19 11:00 SPSC- B- 092- 2017
Supply and deliver interferential combo (01) Recumbent bike (01) 2018-04-10 11:00 ZNQ00670/ 2017- 18
Supply and Delivery of Wet Rations, fresh fruit and vegetables to the Department of Defence (Mthatha area). 2018-07-19 11:00 SPSC- B- 091- 2017
Supply and Delivery of Wet Rations, bread and rolls to the Department of Defence (Mthatha area). 2018-07-19 11:00 SPSC- B- 090- 2017
Supply & Fit Floor Evacuation Floor Plans for KwaDabeka & Satellite Clinics. 2018-04-06 11:00 ZNQ 652/ 17
Establishment of a panel of professional service providers. 2018-04-13 11:00 GTAC 009- 2018
Appointment of an Internet Service Provider to Provide Internet Connection Services for the Mining Qualifications Authority Head office and six (6) Regional offices. 2018-04-24 11:00 MQA/ 46/ 17- 18
Supply and Delivery of Wet Rations, various meat (fresh and frozen) to the Department of Defence (Mthatha area). 2018-07-19 11:00 SPSC- B- 089- 2017
Provision for a group Life Assurance scheme for a period of three years. 2018-04-25 11:00 49/ 2017
Supply and Delivery of Wet Rations, bread and rolls to the Department of Defence (Maluti area). 2018-07-05 11:00 SPSC- B- 080- 2017
Appointment of a Project Management Organisation to implement phase 2 of the Itukise (Internships for Unemployment Graduates) Programme for a period of 40 months. 2018-04-13 11:00 dti 23/ 17- 18
Appointment of accredited training service providers to manage the implementation of the food safety programme in the three (3) clusters for a period of twelve months. 2018-04-20 11:00 NDT0003/ 18
Pest control for hospital and residence 2018-04-05 11:00 ZNQ628/ 17/ 18
Appointment of a service provider to conduct a performance and financial assessment audit on Government employees housing scheme individual linked savings facility. 2018-04-20 11:00 SCM001/ 2017
Provision of ICT central support services for a period of two years for The Department of Justice And Constitutional Development. 2018-04-13 11:00 RFB 2017 09
Supply, Install, Training and Commissioning of four (4) stroke marine diesel engine (port) as per SA Naval Specification. 2018-04-16 11:00 SPSC- B- 125- 2017
Appointment of service providers per province for the rendering of transcriptions services to The Department of Justice and Constitutional Development and the office of The Chief Justice, for a period of thirty six (36) months. 2018-04-13 11:00 RFB 2017 07
Rendering of Security Services for a contract period of thirthy-six(36) months at 58 Middleton Road. 2018-04-25 11:00 ZNTD 04390W


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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