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.
Construction of toilet top structures in Kutlwanong, Kagisho & Phomolong Phase 1 2019-01-28 11:00 INFRA/CE/T2/2018
Tenders are invited to Supply,Install and Deliver eight(8) Gun Safes 2018-12-18 11:00 CSQ12181511
Supply and Deliver Coin Counter Equipment 2018-12-18 11:00 GQ12182007
Repair and resurface of various roads in central business district of Upington 2019-02-01 14:00 TN099/2018
Supply and Deliver Note Counters Equipment 2018-12-18 11:00 GQ12182007
Appointment of consulting engineering firm for the planning, design and project management of water services for Hakskeen Pan 2019-02-01 14:00 TN100/2018
Terms of Reference for Consultant Gender Programme Expert Consultancy Services for Launching the AU Strategy for Gender Equality and Women’s Empowerment 2018-12-21 17:00 AUC/WGDD/C/252
For the supply and installation of HV Surge arresters. 2019-02-05 10:00 KBY/54341
Supply & deliver Tinned Wire Copper 1.6mm fusewire. 2018-12-18 11:00 SQ12181328
Supply & deliver Circuit Breakers 40amp 240volt,5ka CURVE 2 SFM1-G3 complete.no shrouds 2018-12-18 11:00 SQ12181328
Supply & deliver Energy Saving Flourescent Tubes T5 28W/840 1149MM long, Cool White. Osram, Phillips or approved equal. 2018-12-18 11:00 SQ12181328
Supply and deliver 667/TZ/30937/000 EFC Modules 128M Signal Controller -Siemens or approved equal 2018-12-18 11:00 GQ12182003
Supply and deliver Hydraulic Breakers- LH270 Atlas Copco or approved equal 2018-12-18 11:00 GQ11182001
Rental of a digger loader (6-7 ton) for a the month of December 2018 and January 2019 2018-12-18 11:00 292257
Rental of bull dozer for the months of December 2018 and January 2019 2018-12-18 11:00 292038
Rental of light delivery vehicles (engine capacity 2000 cc) for January and February 2019 2018-12-18 11:00 292218
Rental of light delivery vehicles (engine capacity 1400 cc) for January and February 2019 2018-12-18 11:00 123456
Rental of a rear end loading (REL) refuse compactor - 19 m3 (double axle) refuse compactor truck, for December 2018 and January 2019 2018-12-18 11:00 234567
Rental of landfill compactor for December 2018 and January 2019 2018-12-18 11:00 345678
Advertisement for suitable Suppliers and Service Providers to apply and become part of Save the Children South Africa’s Supplier Database 2019-02-15 12:00 No reference number

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
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