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 Install Panorex X-Ray Machine X 01 Unit 2018-06-29 11:00 ZNQ 318 / 18- 19
Emergency and Resuscitation Trolley Complete X 07 Units 2018-06-29 11:00 ZNQ 316 / 18- 19
Supply and Install Autoclave Melag - Steam Sterilizer - Table Top X 01 Unit 2018-06-29 11:00 ZNQ 317 / 18- 19
Appointment of a Commvault authorised service provider to supply Commvault data management license, license maintenance and Commvault support training for a period of three years. 2018-07-13 11:00 NT005- 2018
Provision of External Debt Collection - Public Sector for a period of one (1) year. 2018-07-27 11:00 SCMN003/ 2018
Appointment of a service provider for the implementation and management of the Revised Taxi Racapitalisation Programme (RTRP) 2018-07-13 11:00 DOT/ 05/ 2018/ PT
Appointment of a service provider to develop Lephalale’s Comprehensive Integrated Transport Plan. 2018-07-13 11:00 DOT/ 02/ 2018/ PT
Provision of Internal Audit Service. 2018-07-13 11:00 SAMRC/ ERMPIAS/ 2018/ 06
Supply and install central Suction Motor X 02 Units 2018-06-29 11:00 ZNQ 319 / 18- 19
Appointment of a service provider to conduct impact assessment on INSETA Funded Programmes. 2018-07-17 11:00 Lear/ 2018/ 04
120 Boxes- Nylon 2/0 Colt- Suture - 90mm, 3/8cc - 100cm ( 12 Unit In A Box ) 2018-07-04 11:00 196/ 18
Request for proposal to provide advisory / property consulting services to the Free State Development Corporation. 2018-07-20 12:00 FDC RFP NO. 006/ 2018
40 Boxes - Spongostan Standard (75 X 5 X 1 Cm) (10 Units In a Box) 2018-07-04 11:00 198/ 18
360 (5 Litre) - Disinfecting Instrument Precleaner (12 Months Contract) 2018-07-04 11:00 184/ 18
Installation of Server cabinets and network racks. 2018-07-31 11:00 FSCA2018/ 19- T003
Supply and delivery of an off Site Comprehensive Computerised Tomography (Ct Scan Reporting) Service to George Hospital for a two (2) year period 2018-07-20 11:00 WCGHCC030/ 2018
Terms of Reference for the provisioning of Conferencing and Accommodation facilities for 160 delegates in Gauteng. 2018-07-16 11:00 SCMU: 03 - 2018/ 19
Provide conferencing facilities, accommodation and a practical working site to conduct construction related training in the Western Cape for 50 persons. The services are required for 10 weeks (extended over 10 months) from September 2018 to June 2019. 2018-07-17 11:00 S050/ 18
Bandages elastic adhesive plaster, 100mm x 3m Brown ( 12/Box ) x 108 Boxes 2018-06-29 11:00 ZNQ 16- 2018/ 19
Supply *Scapel Blade Size 22 Box of 10 ( 200 Boxes) 2018-06-29 11:00 28/ 18- 19

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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