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.
Renewal of Veeam Backup and Replication 2 year subscription 2018-10-12 12:00 T28/2018
Test of Compressors as per Health and Safety Act,1993 in Langeberg Municipal Area 2018-09-21 10:15 Q 35/2018
Appointment of Civil Maintenance Contractor for a period of three years. 2018-10-18 12:00 BFN 15/2018
Training: New Venture Creation 2018-09-26 11:00 7G‐37538
Supply & Delivery of 200 Microns, 340 X 280 X 6200mm, 50 Lt, Black Plastic Planting Bags. 2018-09-26 11:00 GQ09181946
Supply & Delivery of 120 Microns, 225 X 200 x 475mm, 20 Lt, Black Plastic Planting Bags 2018-09-26 11:00 GQ09181946
Supply & Delivery o TS 410 Sthil Grinder 2018-09-26 11:00 GQ09181945
Supply delivery and installation of office furniture on as and when required basis for Department of Finance for a period of six (6) months. 2018-10-05 11:00 NWDF03/2018
Appointment of a contractor for the construction of Lemoendraai subsoil drainage under Dawid Kruiper Local Municipality, ZF Mgcawu District Municipality in the Northern Cape province. 2018-10-05 11:00 5/2/2/1 NC CON 0004 (2018/2019)
Supply & Delivery of Expert Mig 250 Multi Function Welder or Approved Equivalent, Including Mb25 Mig Torch 4m or 5m, Flowmeter, Bullnose Nut and Stem, Trolley, Pvc Hose, Plug, and 2 X Hose Clamps 2018-09-26 11:00 GQ09181943
Appointment of a service provider to provide media monitoring services. 2018-10-05 10:00 REQ00468
Cool Coating Kheis Marketing Intelligence Company. 2018-10-08 11:00 487
The MBDA, as the promoters of the competition for the Nelson Mandela Bay Iconic Landmark Precinct, invite eligible persons or organizations to bid for the development of a Comprehensive Business Plan for the Nelson Mandela Bay Iconic Landmark Precinct 2018-09-27 11:00 BDA0918621
Supply, Delivery and Installation of Magicard Card printing machine. 2018-10-09 11:00 iThemba LABS - M2018/19:94
Supply & Delivery of 10 X 200 Lt Drums Ss60 Bitumen Emulsion. (Anionic Stable Grade) 2018-09-26 11:00 GQ09181942
The Department of Public Works and infrastructure hereby invites bids from suitably qualified suppliers to supply and deliver cleaning material to the department for a period of three (3) years. 2018-10-12 11:00 DPWFS (T) 007/2018
Supply & Delivery of 13 mm Stone 2018-09-26 11:00 GQ09181941
Supply & Delivery of Concrete Sand 2018-09-26 11:00 GQ09181941
Appointment of a Civil Maintenance Contractor for a period of three years. 2018-10-17 12:00 ELS 22/2018
Supply & Delivery of Bedding Sand 2018-09-26 11:00 GQ09181941

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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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